Brookfield Renewable Energy Partners L.P.
ANNUAL REPORT
2015
TABLE OF CONTENTS
Letter to Shareholders
Generation and Financial Review for the Year Ended December 31, 2015
Generation and Financial Review for the Year Ended December 31, 2014
Analysis of Consolidated Financial Statements and Other Information
Audited Consolidated Financial Statements as at and for the Year Ended December 31, 2015
1
11
19
26
68
OUR OPERATIONS
We operate our facilities through continental operating platforms in North America, Latin America
and Europe which are designed to maintain and enhance the value of our assets, while cultivating
positive relations with local stakeholders. We own and manage 207 hydroelectric generating stations, 37
wind facilities, three biomass facilities and two natural gas-fired plants. Overall, the assets we own or
manage have 7,284 MW of generating capacity and annual generation of 25,766 GWh based on long-
term averages. The table below outlines our portfolio as at December 31, 2015:
River
Systems
Facilities
Generating Capacity(1)
(MW)
Units
LTA(1)(2)
(GWh)
Storage
(GWh)
Hydroelectric
North America(3)
United States
Canada
Latin America(4)
Wind(5)
North America
United States
Canada
Latin America
Europe
Other(6)
30
19
49
24
73
-
-
-
-
-
-
-
135
33
168
39
207
7
3
10
5
22
37
5
420
3,190
11,367
3,582
73
1,361
5,173
1,261
493
4,551
16,540
4,843
84
821
4,241
-
577
5,372
20,781
4,843
687
220
907
75
270
434
406
840
150
587
1,113
1,197
2,310
587
1,508
1,252
1,577
4,405
11
335
580
-
-
-
-
-
-
-
73
249
1,840
7,284
25,766
4,843
(1)
(2)
(3)
Includes 100% of capacity and generation from equity-accounted investments.
Long-term average (“LTA”) is calculated on an annualized basis from the beginning of the year, regardless of the acquisition
or commercial operation date.
Hydroelectric LTA is the expected average level of generation, as obtained from the results of a simulation based on historical
inflow data performed over a period of typically 30 years.
(4)
Hydroelectric assets located in Brazil benefit from a market framework which levelizes generation risk across producers.
(5) Wind LTA is the expected average level of generation, as obtained from the results based on simulated historical wind speed
(6)
data performed over a period of typically 10 years.
Includes three biomass facilities in Latin America with capacity of 120 MW, and two natural gas-fired (“Co-gen”) plants in
North America with capacity of 215 MW.
The following table presents the annualized long-term average generation of our portfolio as at
December 31, 2015 on a quarterly basis:
GENERATION (GWh)(1)(2)
Q1
Q2
Q3
Q4
Total
Hydroelectric
North America(3)
United States
Canada
Latin America(4)
Wind(5)
North America
United States
Canada
Latin America
Europe
Other(6)
Total
(1)
(2)
3,213
1,229
4,442
1,113
5,555
252
324
576
145
449
1,170
52
6,777
3,239
1,580
4,819
1,047
5,866
373
292
665
146
324
1,135
160
7,161
2,114
1,162
3,276
1,033
4,309
269
238
507
148
292
947
203
2,801
1,202
4,003
1,048
5,051
219
343
562
148
443
1,153
165
11,367
5,173
16,540
4,241
20,781
1,113
1,197
2,310
587
1,508
4,405
580
5,459
6,369
25,766
(3)
Includes 100% of generation from equity-accounted investments.
LTA is calculated on an annualized basis from the beginning of the year, regardless of the acquisition or commercial
operation date.
Hydroelectric LTA is the expected average level of generation, as obtained from the results of a simulation based on historical
inflow data performed over a period of typically 30 years.
Hydroelectric assets in Brazil benefit from a market framework which levelizes generation risk across producers.
(4)
(5) Wind LTA is the expected average level of generation, as obtained from the results based on simulated historical wind speed
(6)
data performed over a period of typically 10 years.
Includes three biomass facilities in Latin America with capacity of 120 MW, and two Co-gen plants in North America with
capacity of 215 MW.
Statement Regarding Forward-Looking Statements and Use of Non-IFRS Measures
This Annual Report contains forward-looking information within the meaning of U.S. and Canadian securities laws. We may make
such statements in this Annual Report, in other filings with the U.S. Securities and Exchange Commission (“SEC”) or in other
communications with Canadian regulators - see “Cautionary Statement Regarding Forward-Looking Statements”. We make use of
non-IFRS measures in this Annual Report - see “Cautionary Statement Regarding Use Of Non-IFRS Measures”. This Annual
Report, our Form 20-F and additional information filed with the SEC and with securities regulators in Canada are available on our
website at www.brookfieldrenewable.com, on the SEC’s website at www.sec.gov or on SEDAR’s website at www.sedar.com.
LETTER TO SHAREHOLDERS
We continue to benefit from high-quality, long-life, predominantly hydro assets that produce significant
free cash flow through all market cycles. Our strategy in this regard remains unchanged. We are working
to build a global portfolio of carbon free renewable generation assets in markets that are either replacing
legacy thermal facilities or where supply has not kept up with historical demand growth ─ and in both
cases, markets that have strong growth prospects over the long term. We take a contrarian approach to
investing, pursuing segments of the renewable power sector that are either undervalued, out of favour or
need considerable operating and development support. This allows us to leverage the deep operating
expertise we have built over the last 20 years. Our goal continues to be to grow cash flow and value on a
per-share basis over time.
Operations and Financial Strength
Our balance sheet continues to be strong as we maintain a conservative capitalization profile, ample
near-term liquidity, and multiple sources of funding so that we are not overly reliant on any particular
market. Accordingly, we have the benefit of focusing our 1,500 employees on protecting and optimizing
our asset base and executing on our growth and development initiatives, regardless of external factors.
The recent year is a good example of this, highlighting the robust nature of our assets, dependability of
our cash flows and the strength of our balance sheet. Despite below-average water levels in both the
United States and Brazil and near-term currency headwinds, we produced Adjusted EBITDA of $1.2
billion and Funds From Operations (FFO) of $467 million. We also funded all of our capex and
maintenance programs, as well as our 140 MW of development currently under construction in Europe
and Brazil. We invested a further $650 million in new assets to accretively grow cash flows and we both
funded and grew our distributions by 7%.
We have over $1.2 billion of near term liquidity at year end reflecting a number of initiatives taken in 2015,
including the following:
Increased our 5 year committed bank lines to over $1.5 billion;
Issued C$400 million of 10-year notes at 3.8%;
Issued C$175 million of perpetual preferred shares at 5.5%;
•
•
•
• Upfinanced existing hydro assets raising $150 million of proceeds to BREP; and
• Monetized our 102 MW wind farm in California at a 25% return to shareholders and redeployed
the proceeds into growth initiatives.
Looking ahead to 2016, we are progressing three additional upfinancings that should generate $250
million of proceeds in the first half of the year. We also expect to continue our capital recycling initiatives
raising an additional $300 - $400 million in 2016. These initiatives will allow us to further strengthen our
liquidity position.
Growth
Over the last five years, we have more than doubled the size of our asset base and expanded into four
new countries and a new continent, all while maintaining a predominantly hydroelectric portfolio. Last year
we made continued strides in this respect, acquiring or integrating nearly 1,000 MW of acquisitions
including a 292 MW hydroelectric portfolio in the United States, more than 500 MW of hydro, wind and
biomass in Brazil, and a 123 MW wind portfolio in Portugal.
This growth has continued into 2016. Early in the new year, we and our institutional partners acquired
58% of the outstanding shares in Isagen S.A. from the Colombian government. Isagen is Colombia’s
third-largest power generation company with more than 3,000 MW of predominantly hydroelectric
capacity, a 3,800 MW development pipeline, and average annual generation of 15,000 gigawatt-hours
which accounts for 20% of the country’s annual production. When our mandatory tender offers to
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 1
remaining shareholders are concluded, we expect to own 25% of Isagen, with the balance owned by our
partners. In the initial stage, we acquired 9% (for $225 million) which was funded with available liquidity.
Our investment in this high-quality renewable energy portfolio represents a major milestone in the
development of our business, providing long-term growth potential in an attractive new market. Colombia
has an attractive history of 3-4% GDP growth, stable inflation, conservative fiscal policies and a
democratic rule of law. Its power market has seen tremendous growth in the last 20 years but is still
significantly undersupplied and like most emerging market economies, its currency has declined by 40%
in the last year, providing an attractive backdrop to make this investment. We look forward to working with
Isagen’s team to further enhance and grow its portfolio.
Outlook
Brookfield Renewable has much to offer investors in the current environment: a hydroelectric portfolio of
extremely high quality, predominantly contracted profile, conservative financial profile with strong liquidity
and access to capital, and a history of outperformance across market cycles. We continue to see
meaningful opportunities to deploy capital on an accretive basis and remain focused on delivering 12-15
percent total returns over the long term.
Our successful track record of execution has also allowed us to steadily grow quarterly distributions. In
light of our 2015 achievements and organic growth prospects, we are announcing an increase in our
annualized distribution to $1.78 per share. This represents a 7% increase over 2015 and is consistent
with our distribution growth target of 5-9% per year. We are confident in our continued ability to increase
distributions given our stable operating profile, financial flexibility, organic growth prospects and the
proven operating history of our power generating assets.
On a final note, I would like to express my sincere appreciation to our employees, directors, shareholders
and business partners for your contributions to our success. We are looking forward to the opportunities
that 2016 will bring and thank you for your continued support.
Sincerely,
Sachin Shah
Chief Executive Officer
February 26, 2016
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 2
OUR COMPETITIVE STRENGTHS
Brookfield Renewable Energy Partners L.P. ("Brookfield Renewable") is the owner and operator
of a diversified portfolio of high quality assets that produce electricity from renewable resources.
Our business model is to utilize our global reach to identify and acquire high quality renewable
power generating assets at favorable valuations, finance them on a long-term, low-risk basis, and
enhance the cash flows and values of these assets using our experienced operating teams to earn
reliable, attractive, long-term total returns for the benefit of our shareholders. As at December 31, 2015:
One of the largest, listed pure-play renewable platforms. We own one of the world’s largest,
publicly-traded, pure-play renewable power portfolios with approximately $20 billion in assets, 7,284 MW
of installed capacity, and long-term average generation from operating assets of 25,766 GWh. Our
portfolio includes 207 hydroelectric generating stations on 73 river systems, 37 wind facilities and three
biomass facilities, diversified across 14 power markets in North America, Latin America and Europe.
Long-term Average Generation by Source of Energy
Long-term Average Generation by Region
Focus on attractive hydroelectric asset class. Our assets are predominantly hydroelectric and
represent one of the longest life, lowest-cost and most environmentally-preferred forms of power
generation. Our North American assets have the ability to store water in reservoirs approximating 29% of
their annualized long-term average generation. Our assets in Brazil benefit from a framework in that
country that levelizes generation risk across hydroelectric producers. The ability to store water in
reservoirs in North America and to benefit from levelized generation in Brazil provides partial protection
against short-term changes in water supply. As a result of our scale and the quality of our assets, we are
competitively positioned compared to other listed renewable power platforms, providing significant
scarcity value to investors.
Well positioned for global growth mandate. We have strong organic growth potential with an
approximate 3,000 MW development pipeline spread across all of our operating platforms, combined with
the ability to capture operating efficiencies and the value of rising power prices for the market-based
portion of our portfolio. Our organic growth is complemented by our strong acquisition ability. Over the
last ten years, we have acquired or commissioned 78 hydroelectric facilities totaling approximately 2,060
MW, 38 wind facilities totaling approximately 1,680 MW and three biomass facilities totaling 120 MW. For
the year ended December 31, 2015, we acquired or commissioned hydroelectric facilities, wind facilities
and biomass facilities that have an installed capacity of 163 MW, 410 MW and 120 MW, respectively. Our
ability to develop and acquire assets is strengthened by our established operating and project
development teams, strategic relationship with Brookfield Asset Management, and our liquidity and
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 3
capitalization profile. We have, in the past, and may continue in the future to pursue the acquisition or
development of assets through arrangements with institutional investors in Brookfield Asset Management
sponsored or co-sponsored partnerships.
Attractive distribution profile. We pursue a strategy which we expect will provide for highly
stable, predictable cash flows sourced from predominantly long-life hydroelectric assets ensuring an
attractive distribution yield. We target a long-term distribution payout ratio of approximately 70% of Funds
From Operations and a long-term distribution growth rate in a range of 5% to 9% annually.
Stable, high quality cash flows with attractive long-term value for limited partnership
unitholders. We intend to maintain a highly stable, predictable cash flow profile sourced from a
diversified portfolio of low operating cost, long-life hydroelectric and wind assets that sell electricity under
long-term, fixed price contracts with creditworthy counterparties. Approximately 90% (on a proportionate
basis) of our 2016 generation output is sold pursuant to power purchase agreements to public power
authorities, load-serving utilities, industrial users or to affiliates of Brookfield Asset Management. The
power purchase agreements for our assets have a weighted-average remaining duration of 17 years,
providing long-term cash flow stability.
Strong financial profile. With approximately $20 billion of assets, our debt to total capitalization
is 39% and approximately 76% of our borrowings are non-recourse to Brookfield Renewable. Corporate
borrowings and subsidiary borrowings have weighted-average terms of approximately seven and nine
years, respectively. Our available liquidity at year end included approximately $1.2 billion of cash and
cash equivalents and the available portions of credit facilities.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 4
Management’s Discussion and Analysis
For the year ended December 31, 2015
HIGHLIGHTS FOR 2015
Operating Results
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh)
Long-term average
Actual
Revenues
Adjusted EBITDA
Funds From Operations
Net income
2015
2014
25,543
23,332
1,628 $
1,177 $
467 $
103 $
23,296
22,548
1,704
1,216
560
203
$
$
$
$
We successfully managed our assets with no material planned outages, high availability and reliability in
line with plan.
Our hydroelectric portfolio in North America and Latin America experienced lower generation resulting in
a 1,683 GWh decrease compared to the prior year. While hydrological conditions were below the long-
term average across North America, particularly in the first two quarters of 2015, inflows improved in the
fourth quarter of 2015 and were used to replenish reservoirs which has positioned us well for 2016.
Hydrology continued to improve in the fourth quarter of 2015 in Latin America. In this period we also
reached an agreement with the Brazilian government to recover revenues equivalent to generation of 278
GWh as compensation for system-wide curtailments in 2015.
Wind generation in Ireland was 32 GWh ahead of last year due to improved wind conditions throughout
this year. This performance was, however, offset by a 146 GWh decrease in generation across our North
American wind portfolio due to weak conditions predominantly experienced during the first half of this
year. Generation from the prior year includes 114 GWh related to the 102 MW wind facility in California
sold in 2015.
The incremental generation from our recently acquired assets in Brazil and Portugal and a full year’s
contribution from hydroelectric facilities acquired and commissioned in 2014 was 2,600 GWh.
Growth and Development
Acquisitions and disposition
A total of 611 MW of renewable energy operating and development projects were acquired in 2015 along
with our institutional partners. We will retain an approximate 40% controlling interest:
• 488 MW renewable power generation portfolio in Brazil, comprised of 163 MW of hydroelectric,
150 MW of wind, and 120 MW of biomass generating capacity. The portfolio is expected to
generate 1,783 GWh annually. The acquisition also included a 55 MW biomass development
project which is expected to be fully commissioned in 2016 and generate 216 GWh
• 123 MW wind portfolio was acquired in Portugal, expected to generate 260 GWh annually
We also acquired a wind development pipeline approximating 1,200 MW in Scotland, taking our total
development pipeline to 3,000 MW. We will retain a 100% interest in this pipeline.
We entered into agreements to acquire two hydroelectric facilities in Brazil with an aggregate capacity of
51 MW and expected to generate 293 GWh annually and two hydroelectric facilities in Pennsylvania with
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 5
an aggregate generating capacity of 292 MW and expected to generate 1,109 GWh annually. The Brazil
acquisition closed in January 2016. We will retain a 100% interest in these facilities. The Pennsylvania
acquisition is expected to close in the first quarter of 2016 and we expect to retain an approximate 40%
controlling interest in the facilities.
We completed the sale of the 102 MW wind facility in California for gross cash consideration of $143
million, inclusive of working capital adjustments, and a gain of $53 million. Our gain, which represents the
22% interest in the facility and net of the cash portion of non-controlling interests, was $12 million.
In January 2016, we and our institutional partners acquired an approximate 57.6% controlling interest in
Isagen S.A. (“Isagen”) from the Colombian government. Isagen is a 3,032 MW portfolio, consisting
predominantly of a portfolio of six, largely reservoir-based, hydroelectric facilities. Annual generation is
expected to approximate 15,000 GWh. In addition, the portfolio includes approximately 3,800 MW of
attractive medium to long-term development projects providing further growth opportunity. Brookfield
Renewable’s initial equity investment is $225 million for a 9% economic interest in Isagen after
accounting for the non-controlling interests of its institutional partners. If our consortium is successful in
acquiring all of the remaining outstanding Isagen shares, a further $1.4 billion would be invested.
Brookfield Renewable’s interest in Isagen would then increase to approximately 23% with a further
approximate $400 million investment.
Construction and development
We achieved full commissioning of three Irish wind facilities totaling 137 MW, expected to generate 382
GWh annually.
We continue to advance the construction, on scope, schedule and budget, of 127 MW of hydroelectric
and biomass development projects in Brazil. Collectively, these three projects are expected to generate
624 GWh annually with commissioning expected between 2016 and 2018. We also continued
construction, on scope, schedule and budget, of a 14 MW wind project in Northern Ireland expected to
generate 38 GWh annually with commissioning expected in 2016.
Liquidity and Capital Resources
Our available liquidity at year end included approximately $1.2 billion of cash and cash equivalents and
the available portions of credit facilities. Our debt to total capitalization is 39% and approximately 76% of
our borrowings are non-recourse to Brookfield Renewable. Corporate borrowings and subsidiary
borrowings have weighted-average terms of approximately 7 and 9 years, respectively.
Long term debt and credit facilities
Credit facilities and corporate borrowings
• Extended the maturity of our credit facilities by one year and expanded the available amount to
$1,560 million
•
Issued C$400 million ($317 million) of medium-term corporate notes
Subsidiary borrowings
• Completed a $400 million bond financing and $26 million letter of credit and working capital
facility associated with our 610 MW pumped storage and hydroelectric facilities in New England
• Reduced the margin from 2.25% to 1.625% on C$194 million ($155 million) and C$119 million
($95 million) of debt associated with a 189 MW wind portfolio and 51 MW wind facility,
respectively, in Ontario
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 6
• Refinanced indebtedness associated with a 45 MW hydroelectric portfolio in British Columbia by
issuing C$90 million ($76 million) of bonds
• Secured an 18-month extension on $75 million of debt associated with a portfolio of hydroelectric
and wind facilities in the United States held through the Brookfield Americas Infrastructure Fund
• Secured financing in the amount of R$187 million ($47 million) with respect to 90 MW of biomass
capacity in Brazil
Equity transactions
•
Issued Class A, Series 7 preferred limited partnership units (“Preferred LP Units”) at a price of
C$25 per unit for gross proceeds of C$175 million ($132 million)
• Commenced a normal course issuer bid in connection with the repurchase of up to 10% of our
Class A Preference Shares, and up to 7.1 million limited partnership units (“LP Units”). The
normal course issuer bids terminate on June 25, 2016 and December 28, 2016, respectively
• Announced an offer to exchange our Class A, Series 5 Preference Shares for newly issued Class
A, Series 5 Preferred LP Units. In February 2016, a total of 2,885,496 Series 5 Preference
Shares were tendered and exchanged for an equal number of Series 5 Preferred LP Units
Distribution increases
•
•
In February 2015, increased LP Unitholder distributions to $1.66 per LP Unit on an annualized
basis, an increase of 11 cents per LP Unit
In February 2016, announced an increase in LP Unitholder distributions to $1.78 per LP Unit on
an annualized basis, an increase of 12 cents per LP Unit, to take effect with the first quarter
distribution payable in March 2016
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 7
HISTORICAL OPERATIONAL AND FINANCIAL INFORMATION
(MILLIONS, EXCEPT AS NOTED)
Operational information:(2)
Capacity (MW)
Long-term average generation (GWh)(3)
Actual generation (GWh)(3)
Average revenue ($ per MWh)
Selected financial information
Revenues
Adjusted EBITDA(4)
Funds From Operations(4)
Adjusted Funds From Operations(4)
Net income
Funds From Operations per LP Unit(4)(5)
Distributions per LP Unit(6)
(MILLIONS, EXCEPT AS NOTED)
Balance sheet data:
Property, plant and equipment, at fair value $
Equity-accounted investments
Total assets
For the years ended December 31
2015
2014
2013
2012
2011(1)
7,284
25,543
23,332
70
6,707
23,296
22,548
77
5,849
21,836
22,222
77
5,304
18,202
15,942
82
4,536
16,297
15,877
74
$
1,628 $
1,177
1,704 $
1,216
1,706 $
1,208
1,309 $
852
1,169
804
467
407
103
1.69
1.66
560
502
203
2.07
1.55
594
538
215
2.24
1.45
As at December 31
347
295
(95)
1.31
1.38
332
284
(451)
1.25
0.34
2015
2014
2013
2012
2011(1)
18,358 $
197
19,507
18,566 $
273
19,849
15,741 $
290
16,999
15,702 $
344
16,943
14,002
405
15,713
Long-term debt and credit facilities
Deferred income tax liabilities
Total liabilities
7,338
2,695
10,744
7,678
2,637
10,968
6,623
2,265
9,463
6,119
2,349
9,135
5,519
2,367
8,529
Participating non-controlling interests -
in operating subsidiaries
2,587
2,062
1,303
1,028
629
54
52
63
59
General partnership interest in a holding
subsidiary held by Brookfield
Participating non-controlling interests -
in a holding subsidiary - Redeemable
3,089
/Exchangeable units held by Brookfield
241
Preferred equity
-
Preferred limited partners' equity
3,161
Limited partners' equity
7,184
Total equity
Debt to total capitalization(7)
37%
(1) For periods prior to November 28, 2011, the date of completion of a strategic combination of the renewable power generating
assets of Brookfield Renewable Power Inc. and Brookfield Renewable Power Fund, the financial information for Brookfield
Renewable represents the combined financial information for the Brookfield Renewable Power Division, a division of Brookfield
Asset Management.
Includes 100% of capacity and generation from equity-accounted investments.
(2)
(3) For assets acquired or reaching commercial operation during the year, this figure is calculated from the acquisition or
2,657
796
-
2,726
7,536
41%
3,070
500
-
3,147
7,808
38%
2,865
728
-
3,167
8,881
40%
2,559
610
128
2,827
8,763
39%
64
commercial operation date and is not annualized.
(4) Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures”, “Financial Review by Segments for
the Year Ended December 31, 2015” and “Financial Review by Segments for the Year Ended December 31, 2014”.
(5) For the year ended December 31, 2015, weighted average LP units, Redeemable/Exchangeable units and General Partnership
units totaled 275.6 million (2014: 271.1 million; 2013: 265.3 million; 2012: 265.2 million and 2011: 265.1 million).
(6) Represents distributions per unit to holders of Redeemable/Exchangeable partnership units, LP Units and GP interest.
(7) Total capitalization is calculated as total debt plus deferred income tax liabilities, net of deferred income tax assets, and equity.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 8
This Management’s Discussion and Analysis for the year ended December 31, 2015 is provided
as of February 26, 2016. Unless the context indicates or requires otherwise, the terms “Brookfield
Renewable”, “we”, “us”, and “our” mean Brookfield Renewable Energy Partners L.P. and its controlled
entities.
Brookfield Renewable’s financial statements are prepared in accordance with International
Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board
(“IASB”), which require estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities as at the date of the financial statements and the amounts
of revenue and expense during the reporting periods.
Certain comparative figures have been reclassified to conform to the current year’s presentation.
Unless otherwise indicated, all dollar amounts are expressed in United States (“U.S.”) dollars.
The ultimate parent of Brookfield Renewable is Brookfield Asset Management Inc. (“Brookfield
Asset Management”). Brookfield Asset Management and its subsidiaries, other than Brookfield
Renewable, are also individually and collectively referred to as “Brookfield” in this Management’s
Discussion and Analysis.
Voting Agreements with Affiliates
Brookfield Renewable has entered into voting agreements with Brookfield, whereby Brookfield
Renewable gained control of the entities that own certain United States, Brazil and Europe renewable
power generating operations. The voting agreements provide Brookfield Renewable the authority to direct
the election of the Boards of Directors of the relevant entities, among other things, and therefore provide
Brookfield Renewable with control. Accordingly, Brookfield Renewable consolidates the accounts of these
entities.
The voting agreements do not represent business combinations in accordance with IFRS 3
Business Combinations (“IFRS 3”), as all combining businesses are ultimately controlled by Brookfield
Asset Management both before and after the transactions were completed. Brookfield Renewable
accounts for these transactions involving entities under common control in a manner similar to a pooling
of interest, which requires the presentation of pre-voting agreement financial information as if the
transactions had always been in place. Refer to Note 2(o)(ii) – Critical judgments in applying accounting
policies - Common control transactions in our audited consolidated financial statements for our policy on
accounting for transactions under common control.
PRESENTATION TO PUBLIC STAKEHOLDERS
interest
in BRELP held by Brookfield
Brookfield Renewable’s consolidated equity interests include the non-voting limited partnership
units ("LP Units") held by public unitholders and Brookfield, Redeemable/Exchangeable limited
partnership units in Brookfield Renewable Energy L.P. (“BRELP”), a holding subsidiary of Brookfield
Renewable, held by Brookfield (“Redeemable/Exchangeable partnership units”), and a general
partnership
the
Redeemable/Exchangeable partnership units have the same economic attributes in all respects, except
that the Redeemable/Exchangeable partnership units provide Brookfield the right to request that their
units be redeemed for cash consideration. In the event that Brookfield exercises this right, Brookfield
Renewable has the right, at its sole discretion, to satisfy the redemption request with LP Units, rather than
cash, on a one-for-one basis. Brookfield, as holder of Redeemable/Exchangeable partnership units,
participates in earnings and distributions on a per unit basis equivalent to the per unit participation of the
LP Units. As Brookfield Renewable, at its sole discretion, has the right to settle the obligation with LP
Units, the Redeemable/Exchangeable partnership units are classified under equity, and not as a liability.
interest”). The LP Units and
(“GP
Given
the exchange
referenced above, we are presenting LP Units,
Redeemable/Exchangeable partnership units, and the GP interest as separate components of
consolidated equity. This presentation does not impact the total income (loss), per unit or share
information, or total consolidated equity.
feature
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 9
As at the date of this report, Brookfield owns an approximate 62% LP Unit interest, on a fully-
exchanged basis, and all general partnership interests in Brookfield Renewable, representing a 0.01%
interest, while the remaining approximately 38% is held by the public.
PERFORMANCE MEASUREMENT
Our operations are segmented by the type of power generation (Hydroelectric, Wind, and Other,
which includes Biomass and Co-gen) with Hydroelectric and Wind further segmented by geography
(North America, which is comprised of the United States and Canada segments, Latin America, and
Europe), as that is how Brookfield Renewable’s Chief Executive Officer and Chief Financial Officer
(collectively, the chief operating decision maker, or “CODM”) review our results, manage operations and
allocate resources. Accordingly, we report our results in accordance with these segments. Refer to Note
29 – Segmented information in our audited consolidated financial statements for further details.
In January 2016 Brookfield Renewable, with its institutional partners, acquired a 57.6% controlling
interest in Isagen from the Colombian government. Beginning on the date of the acquisition, information
regarding Isagen will be provided to the CODM and accordingly the acquired business in Colombia will be
defined as a segment in the first quarter of 2016. For the year ended December 31, 2015, the “Latin
America” Hydroelectric and Wind segments are comprised solely of information related to Brookfield
Renewable’s power generating assets in Brazil.
One of our primary business objectives is to generate reliable and growing cash flows while
minimizing risk for the benefit of all stakeholders. We monitor our performance in this regard through four
key metrics — i) Net Income (Loss), ii) Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (“Adjusted EBITDA”), iii) Funds From Operations, and iv) Adjusted Funds From Operations.
It is important to highlight that Adjusted EBITDA, Funds From Operations, and Adjusted Funds
From Operations do not have any standardized meaning prescribed by IFRS and therefore are unlikely to
be comparable to similar measures presented by other companies. We provide additional information
below on how we determine Adjusted EBITDA, Funds From Operations, and Adjusted Funds From
Operations, as well as reconciliations to net income (loss) and cash flows from operating activities. See
“Financial Review by Segments for the Year Ended December 31, 2015” and “Financial Review by
Segments for the Year Ended December 31, 2014”.
Net Income (Loss)
Net income (loss) is calculated in accordance with IFRS.
Adjusted EBITDA
Adjusted EBITDA means revenues, other income, and our share of cash earnings from equity-
accounted investments less direct costs (including energy marketing costs), before interest, income taxes,
depreciation, management service costs and the cash portion of non-controlling interests.
Funds From Operations
Funds From Operations is defined as Adjusted EBITDA less interest, current income taxes and
management service costs, which is then adjusted for the cash portion of non-controlling interests and
distributions to preferred limited partners. For the year ended December 31, 2014, Funds From
Operations include the earnings received from the wind portfolio we acquired in Ireland, reflecting our
economic interest from January 1, 2014 to June 30, 2014.
Our payout ratio is defined as distributions to Redeemable/Exchangeable partnership units, LP
Units and the GP interest, including general partnership incentive distributions, divided by Funds From
Operations.
Adjusted Funds From Operations
Adjusted Funds From Operations is defined as Funds From Operations less Brookfield
Renewable’s share of adjusted sustaining capital expenditures (based on long-term sustaining capital
expenditure plans).
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 10
December 31:
GENERATION (GWh)
Hydroelectric
North America
United States
Canada
GENERATION AND FINANCIAL REVIEW FOR THE YEAR ENDED DECEMBER 31, 2015
The following table reflects the actual and long-term average generation for the year ended
Actual Generation(1)
2014
2015
LTA Generation(1)
Actual vs. LTA
Prior Year
2015
2014
2015
2014
Variance of Results
Actual vs.
10,128
10,293
11,367
10,785
(1,239)
4,810
5,570
5,173
5,132
(363)
14,938
15,863
16,540
15,917
(1,602)
Latin America
3,691
3,371
4,024
3,614
(333)
18,629
19,234
20,564
19,531
(1,935)
Wind
North America
United States
Canada
Latin America
Europe(2)
936
1,016
1,952
459
1,551
3,962
1,170
1,042
2,212
-
891
3,103
1,267
1,197
2,464
442
1,493
4,399
1,394
1,197
2,591
-
826
(331)
(181)
(512)
17
58
3,417
(437)
(314)
(492)
438
(54)
(243)
(297)
(224)
(155)
(379)
-
65
(165)
(760)
(925)
320
(605)
(234)
(26)
(260)
459
660
859
Other
Total(3)
784
(1) For assets acquired or reaching commercial operation during the year, this figure is calculated from the acquisition or
25,543
22,548
23,332
23,296
(2,211)
(137)
(748)
530
741
211
580
161
348
commercial operation date and is not annualized.
(2) We completed the acquisition of the wind portfolio in Ireland on June 30, 2014. Pursuant to the terms of the purchase and sale
agreement, Brookfield Renewable acquired an economic interest in the wind portfolio from January 1, 2014. Accordingly, 2014
numbers include generation for the period from January 1, 2014 to June 30, 2014.
Includes 100% of generation from equity-accounted investments.
(3)
We compare actual generation levels against the long-term average to highlight the impact of one
of the important factors that affect the variability of our business results. In the short-term, we recognize
that hydrology and wind conditions will vary from one period to the next; over time however, we expect
our facilities will continue to produce in line with their long-term averages, which have proven to be
reliable indicators of performance.
Our risk of a generation shortfall in Latin America continues to be minimized by participation in a
hydrological balancing pool administered by the government of Brazil. This program mitigates hydrology
risk by assuring that all participants receive, at any particular point in time, an assured energy amount,
irrespective of the actual volume of energy generated. The program reallocates energy, transferring
surplus energy from those who generated an excess to those who generate less than their assured
energy, up to the total generation within the pool. Periodically, low precipitation across the entire country’s
system could result in a temporary reduction of generation available for sale. During these periods, we
expect that a higher proportion of thermal generation would be needed to balance supply and demand in
the country potentially leading to higher overall spot market prices. In anticipation of adverse hydrological
conditions, we continue to maintain a lower level of contracted power in the portfolio, thereby preserving
optionality and flexibility in the portfolio and allowing us to capture increased revenues in times of strong
power prices.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 11
Generation during the year ended December 31, 2015 totaled 23,332 GWh, below the long-term
average of 25,543 GWh and an increase of 784 GWh compared to the prior year.
Our hydroelectric portfolio in North America and Latin America experienced lower generation
resulting in a 1,683 GWh decrease compared to the prior year. While hydrological conditions were below
the long-term average across North America, particularly in the first two quarters of 2015, inflows
improved in the fourth quarter of 2015 and were used to replenish reservoirs which has positioned us well
for 2016. Hydrology continued to improve in the fourth quarter of 2015 in Latin America. In this period we
also reached an agreement with the Brazilian government to recover revenues equivalent to generation of
278 GWh as compensation for system-wide curtailments in 2015.
Our Irish wind portfolio generated 32 GWh ahead of last year due to improved wind conditions
throughout this year. This performance was, however, offset by a 146 GWh decrease in generation
across our North American wind portfolio due to weak conditions predominantly experienced during the
first half of this year. Generation from the prior year includes 114 GWh related to the 102 MW wind facility
in California sold in 2015.
Our recently acquired 433 MW hydroelectric, wind and biomass portfolio in Brazil and 123 MW
wind portfolio in Portugal contributed 1,371 GWh and 267 GWh, respectively. Contributions from Irish
wind assets commissioned during 2015 were 361 GWh. The incremental generation from a full year’s
contribution from hydroelectric facilities acquired and commissioned in 2014 was 601 GWh, which
brought the total contribution from the growth in the portfolio to 2,600 GWh. This was below the long term
average of 2,728 GWh.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 12
The following table reflects Adjusted EBITDA, Funds From Operations, Adjusted Funds From
Operations, and provides a reconciliation to net income for the year ended December 31:
(MILLIONS, EXCEPT AS NOTED)
Revenues
Other income(1)(2)(3)
Share of cash earnings from equity-accounted investments
Direct operating costs
Adjusted EBITDA(4)
Fixed earnings adjustment(5)
Interest expense – borrowings
Management service costs
Current income taxes
Less: cash portion of non-controlling interests
Participating non-controlling interests - in operating subsidiaries
Preferred equity
Less: distributions to preferred limited partners
Funds From Operations(4)
Less: adjusted sustaining capital expenditures(6)
Adjusted Funds From Operations(4)
Add: cash portion of non-controlling interests(1)
Add: distributions to preferred limited partners
Add: adjusted sustaining capital expenditures
Less: fixed earnings adjustment
Other items:
Depreciation
Unrealized financial instruments (loss) gain
Share of non-cash loss from equity-accounted investments
Deferred income tax recovery
Other
Net income
2015
1,628 $
81
20
(552)
1,177
-
(429)
(48)
(18)
(184)
(30)
(1)
467
(60)
407
255
1
60
-
(616)
(9)
(10)
78
(63)
103 $
2 $
2014
1,704
10
26
(524)
1,216
11
(415)
(51)
(18)
(145)
(38)
-
560
(58)
502
183
-
58
(11)
(548)
10
(23)
29
3
203
58
$
$
$
Net income attributable to limited partners' equity
Basic and diluted earnings per LP Unit(7)
(1)
0.42
In July 2015, Brookfield Renewable, along with its institutional partners, sold its interest in a 102 MW wind facility in California to
a third party for gross cash consideration of $143 million, resulting in a gain of $53 million. See Note 5 - Disposal of assets and
Note 23 - Other income in our audited consolidated financial statements. Brookfield Renewable’s share of the gain was $12
million, representing the 22% interest in the facility and is net of the cash portion of non-controlling interests.
In July 2015, concession agreements relating to two Brazilian hydroelectric facilities expired. Brookfield Renewable elected not
to renew these concession agreements in exchange for compensation of $17 million.
In 2015, Brookfield Renewable realized gains of $31 million on the settlement of foreign currency contracts. See Note 23 - Other
income in our audited consolidated financial statements.
0.01 $
$
(4) Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures” and “Financial Review by Segments
(2)
(3)
for the Year Ended December 31, 2015”.
(5) The fixed earnings adjustment relates to Brookfield Renewable’s investment in the acquisition of the wind portfolio in Ireland.
Pursuant to the terms of the purchase and sale agreement, Brookfield Renewable acquired an economic interest in the wind
portfolio from January 1, 2014. The transaction closed on June 30, 2014, and accordingly under IFRS, the $11 million net Funds
From Operations contribution was recorded as part of the purchase price.
(6) Based on long-term sustaining capital expenditure plans.
(7) Average LP Units outstanding during the period totaled 143.3 million (2014: 138.8 million).
Revenues totaling $1,628 million represent a decrease of $76 million.
The North American hydroelectric portfolio’s decrease in generation combined with a relatively
lower pricing environment, particularly in the first quarter of 2015, impacted revenues by $110 million. In
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 13
Brazil, strong power prices captured from un-contracted power in our hydroelectric portfolio and improved
hydrology resulted in an increase in revenues of $7 million.
The North American wind portfolio’s decrease in generation was partially offset by improved wind
conditions in Ireland and escalations in our power purchase agreements resulting in a net $4 million
impact to revenues. As the 102 MW wind facility in California was sold at the beginning of the third
quarter of 2015, the decrease in contributions to revenues from the prior year amounted to $13 million.
Our recently acquired portfolio in Brazil and wind portfolio in Portugal contributed $65 million and
$28 million, respectively. Revenues from our Irish wind assets commissioned in 2015 totaled $57 million
while the incremental revenues from a full year’s contribution of facilities acquired or commissioned in
2014 totaled $45 million. The total revenue from the growth in the portfolio was $195 million.
Canadian dollar and Euro exposure, representing 30% of our entire portfolio, continues to be
proactively managed through foreign currency contracts. The Brazilian Real exposure, representing 20%
of our entire portfolio, is not managed through foreign currency contracts due to high associated costs.
However, our exposure to the Brazilian Real is mitigated by the annual inflation-linked escalations in our
power purchase agreements. Therefore, while our exposure to exchange rate fluctuations continues to be
managed and mitigated through the measures outlined above, the impact of changes in the exchange
rates between the U.S. dollar and the Canadian dollar, Euro and Brazilian Real can impact our
consolidated results. The appreciation of the U.S. dollar resulted in a $142 million reduction in
revenues. This also affected operating and borrowing costs and, with the effect of the ongoing foreign
currency hedging program, reduced the net impact on Funds From Operations to $24 million.
The average total revenue per MWh of $70 decreased $7 per MWh, primarily reflecting the
appreciation of the U.S. dollar impacting our revenues denominated in Canadian dollars, Euros and the
Brazilian Real.
Direct operating costs totaling $552 million represent an increase of $28 million, primarily
reflecting the growth in our portfolio.
Interest expense totaling $429 million represents an increase of $14 million. The borrowing costs
attributable to the growth in our portfolio and the issuance of C$400 million of medium-term corporate
notes were partly offset by the savings attributable to repayments on certain subsidiary borrowings.
Management service costs totaling $48 million represent a decrease of $3 million, which was
primarily attributable to the appreciation of the U.S. dollar.
The cash portion of non-controlling interests totaling $214 million represent an increase of $31
million. The increase related to the growth in our portfolio was partially offset by the decrease in
performance from certain assets in our portfolio.
Funds From Operations totaling $467 million represent a decrease of $93 million, reflecting the
variances described above. The growth in our portfolio contributed $24 million to Funds From Operations.
Net income was $103 million for the year ended December 31, 2015 (2014: Net income of $203
million) resulting in a net income per LP Unit of $0.01 (2014: $0.42).
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 14
SEGMENTED DISCLOSURES
Segmented information is prepared on the same basis that Brookfield Renewable’s CODM manages the
business, evaluates financial results, and makes key operating decisions. See Note 29 - Segmented
information in our consolidated financial statements.
HYDROELECTRIC
The following table reflects the results of our hydroelectric operations for the year ended
December 31:
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA(1)(2)
Generation (GWh) – actual(1)(2)
Revenues
Adjusted EBITDA(3)
Funds From Operations(3)
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA(1)(2)
Generation (GWh) – actual(1)(2)
Revenues
Adjusted EBITDA(3)
Funds From Operations(3)
(1)
(2)
North America
United States
Canada
11,367
10,128
$
$
698
453
200
$
$
5,173
4,810
305
255
190
North America
2015
Total
16,540
14,938
1,003
708
390
$
$
2014
Latin
America
4,024
3,691
225
188
136
Latin
$
$
United States
Canada
Total
America
10,785
10,293
$
$
719
493
256
$
$
5,132
5,570
394
315
243
15,917
15,863
1,113
808
499
$
$
$
$
3,614
3,371
265
198
149
Total
20,564
18,629
1,228
896
526
Total
19,531
19,234
1,378
1,006
648
$
$
$
$
Includes 100% of generation from equity-accounted investments.
For assets acquired or reaching commercial operation during the year, this figure is calculated from the acquisition or
commercial operation date and is not annualized.
Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures”, and “Financial Review By
Segments For the Year Ended December 31, 2015”.
(3)
North America
Generation from the portfolio was 14,938 GWh, below the long-term average of 16,540 GWh and
lower than prior year generation of 15,863 GWh. While we experienced lower generation in North
America relative to the long-term average and prior year, inflows in the fourth quarter of 2015 returned to
the long-term average. As at December 31, 2015, reservoir levels were in line with the long-term average,
positioning us well for 2016.
Revenues totaling $1,003 million represent a decrease of $110 million. Funds From Operations
totaling $390 million represent a decrease of $109 million.
United States
Generation from the portfolio was 10,128 GWh, below the long-term average of 11,367 GWh and
lower than prior year generation of 10,293 GWh. Our portfolio, most notably at our facilities in New York,
Louisiana and New England, experienced lower generation resulting in a 716 GWh decrease compared
to the prior year. The incremental generation from a full year’s contribution from facilities acquired in 2014
was 551 GWh.
Revenues totaling $698 million represent a decrease of $21 million. The lower generation
contributed to a $44 million reduction in revenues. While market prices have returned to near cyclical lows
experienced in 2012, we are seeing price recovery in the forward curve supported through strengthening
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 15
capacity prices. Therefore, our merchant facilities continue to perform above our expectations. Merchant
pricing did not reach the peaks we experienced in the prior year, particularly in the first quarter of 2014,
and the net impact was a $15 million reduction in revenues. A full year’s contribution from facilities
acquired in 2014 resulted in incremental revenues of $38 million.
Funds From Operations totaling $200 million represent a decrease of $56 million, primarily
attributable to the decrease in revenues from wholly-owned facilities, a lower relative pricing environment,
and lower cash earnings from our equity-accounted pumped-storage facility in Massachusetts due to
lower realized pricing.
Canada
Generation from the portfolio was 4,810 GWh, below the long-term average of 5,173 GWh and
lower than prior year generation of 5,570 GWh. Generation was below the long-term average and the
prior year when our facilities in Ontario had benefited from higher than normal inflows. The incremental
generation from a full year’s contribution from our facility in British Columbia commissioned in 2014 was
50 GWh.
Revenues totaling $305 million represent a decrease of $89 million. The net impact on revenues
from lower generation, partially offset by the annual escalations in our power purchase agreements, was
$51 million. The appreciation of the U.S. dollar impacted revenues by $45 million, but operating and
borrowing costs were also affected and the net impact was largely offset by the ongoing foreign currency
hedging program. The commissioned facility in British Columbia contributed $7 million.
Funds From Operations totaling $190 million represent a decrease of $53 million, primarily due to
the lower generation.
Latin America
Generation from the portfolio was 3,691 GWh, below the long-term average of 4,024 GWh and
higher than prior year generation of 3,371 GWh. Hydrology continued to improve in the fourth quarter of
2015. In this period we reached an agreement with the Brazilian government to recover revenues
equivalent to generation of 278 GWh as compensation for system-wide curtailments in 2015. Our recently
acquired 163 MW facilities in Brazil contributed 477 GWh which was below the long-term average of 498
GWh.
Revenues totaling $225 million represent a decrease of $40 million. The relatively stronger power
prices we were able to capture by maintaining a lower level of contracted power in the portfolio, the
aforementioned recovery relating to curtailment, and the amounts received for the settlement of matters
related to the delayed completion of a hydroelectric facility in Brazil were partially offset by the lower
generation, resulting in a net increase in revenues of $7 million. The appreciation of the U.S. dollar
impacted revenues by $72 million, but also affected operating and borrowing costs, resulting in a net
decrease in Funds From Operations of $39 million.
The facilities acquired during the year contributed $25 million of revenues.
Funds From Operations totaling $136 million represent a decrease of $13 million. Our election to
not renew expired concession agreements for two Brazilian facilities resulted in compensation of $17
million, and the contribution from the growth in the portfolio was $4 million.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 16
WIND
The following table reflects the results of our wind operations for the year ended December 31:
(MILLIONS, EXCEPT AS NOTED)
2015
North America
Latin
United States
Canada
Total
America
Europe
1,267
936
1,197
1,016
2,464
1,952
442
459
1,493
1,551
$
$
101 $
105 $
206 $
22 $
138 $
76
86
162
21
103
20 $
56 $
76 $
5 $
32 $
United States
North America
Canada
1,394
1,170
$
129
$
86
1,197
1,042
123
105
2014
Total
2,591
2,212
$
$
252
191
Latin
America
Europe
N/A
N/A
N/A
N/A
$
826
891
45
29
$
Total
4,399
3,962
366
286
113
Total
3,417
3,103
297
220
Generation (GWh) – LTA(1)(2)
Generation (GWh) – actual(1)(2)
Revenues
Adjusted EBITDA(3)
Funds From Operations(3)
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA(1)(2)
Generation (GWh) – actual(1)(2)
Revenues
Adjusted EBITDA(3)
Funds From Operations(3)
(1)
(2)
$
67
Includes 100% of generation from equity-accounted investments.
For assets acquired or reaching commercial operation during the year, this figure is calculated from the acquisition or
commercial operation date and is not annualized.
Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures”, and “Financial Review By
Segments For the Year Ended December 31, 2015”.
N/A
13
80
18
98
$
$
$
$
$
(3)
North America
Generation from the portfolio was 1,952 GWh, below the long-term average of 2,464 GWh and
lower than prior year generation of 2,212 GWh.
Revenues totaling $206 million represent a decrease of $46 million. Funds From Operations
totaling $76 million represent a decrease of $4 million.
United States
Generation from the portfolio of 936 GWh was below the long-term average of 1,267 GWh and
lower than prior year generation of 1,056 GWh, primarily attributable to weak wind conditions in California
during the first half of the year. As the 102 MW wind facility in California was sold at the beginning of the
third quarter of 2015, the decrease in contributions amounted to 114 GWh in generation, $13 million in
revenues, and $1 million in Funds From Operations.
Revenues totaling $101 million represent a decrease of $28 million primarily attributable to the
decrease in generation and sale of the California wind facility.
Funds From Operations totaling $20 million represent an increase of $7 million. Our share of the
gain on the sale of the wind facility was $12 million. Also impacting Funds From Operations were savings
attributable to normal course repayments on certain subsidiary borrowings, operating cost containment
initiatives, and the lower cash portion of non-controlling interests attributable to a decrease in
performance at our California facilities.
Canada
Generation from the portfolio of 1,016 GWh was below the long-term average of 1,197 GWh and
lower than prior year generation of 1,042 GWh, primarily attributable to weak wind conditions in the first
three quarters of this year.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 17
Revenues totaling $105 million represent a decrease of $18 million. Lower generation was
partially offset by annual escalations in our power purchase agreements. The appreciation of the U.S.
dollar impacted revenues by $15 million but also affected operating and borrowing costs and the net
result was a decrease in Funds From Operations of $7 million. Funds From Operations totaling $56
million represent a decrease of $11 million primarily attributable to the factors noted above.
Latin America
Our recently acquired 150 MW facilities in Brazil contributed 459 GWh which was above the long-
term average 442 GWh.
Revenues and Funds From Operations totaled $22 million and $5 million, respectively.
Europe
Generation from the portfolio of 1,551 GWh was above the long-term average of 1,493 GWh and
higher than prior year generation of 891 GWh.
Our portfolio generated 32 GWh ahead of last year due to improved wind conditions throughout
this year, and representing a return to normal wind conditions.
Our recently acquired 123 MW wind portfolio in Portugal contributed 267 GWh. Contributions from
Irish wind assets commissioned during 2015 were 361 GWh which brought the total contribution from the
growth in the portfolio to 628 GWh. This was in line with long term average.
Revenues and Funds From Operations totaled $138 million and $32 million, respectively. The
Irish and Portuguese portfolios contributed Funds From Operations of $26 million and $6 million,
respectively.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 18
GENERATION AND FINANCIAL REVIEW FOR THE YEAR ENDED DECEMBER 31, 2014
The following table reflects the actual and long-term average generation for the year ended
December 31:
Actual Generation(1)
2013
2014
LTA Generation(1)
Actual vs. LTA
Prior Year
2014
2013
2014
2013
Variance of Results
Actual vs.
GENERATION (GWh)
Hydroelectric generation
United States
10,293
10,082
10,785
Canada
Brazil
Wind energy
United States
Canada
Europe(2)
9,681
5,062
3,656
5,570
3,371
5,494
3,656
5,132
3,614
19,234
19,232
19,531
18,399
1,170
1,042
891
1,145
1,075
-
1,394
1,197
826
1,341
1,197
-
3,103
2,220
3,417
2,538
(492)
438
(243)
(297)
(224)
(155)
65
(314)
401
432
-
833
(196)
(122)
-
(318)
211
76
(285)
2
25
(33)
891
883
Other
Total(3)
326
(1) For assets acquired or reaching commercial operation during the year, this figure is calculated from the acquisition or
22,548
23,296
22,222
21,836
(129)
(748)
(137)
(559)
211
770
348
386
899
commercial operation date and is not annualized.
(2) We completed the acquisition of the wind portfolio in Ireland on June 30, 2014. Pursuant to the terms of the purchase and sale
agreement, Brookfield Renewable acquired an economic interest in the wind portfolio from January 1, 2014. Accordingly, 2014
numbers include generation for the period from January 1, 2014 to June 30, 2014.
Includes 100% of generation from equity-accounted investments.
(3)
Generation levels during the year ended December 31, 2014 totaled 22,548 GWh, compared to
the long-term average of 23,296 GWh, and an increase of 326 GWh as compared to the prior year.
The hydroelectric portfolio generated 19,234 GWh, below the long-term average of 19,531 GWh
and consistent with the prior year. Generation from existing facilities was 18,192 GWh, compared to
19,232 GWh for the prior year. The decrease in generation was primarily attributable to inflows at our
Tennessee and North Carolina facilities returning to more normal levels compared to the prior year, when
generation was above the long-term average. The impact on financial results was partly offset by the non-
controlling interests. Inflows were strong and generation levels were above long-term average across the
majority of the Canadian portfolio, consistent with the prior year. As at December 31, 2014, reservoir
levels in Canada and the United States were above average. In Brazil, our participation in the
hydrological balancing pool mitigated the impact of drought-like conditions and resulted in generation
being only 8% lower than assured levels. The recent growth in our portfolio resulted in incremental
generation of 821 GWh, and a full year’s contribution from facilities acquired in 2013 resulted in
incremental generation of 221 GWh.
The wind portfolio generated 3,103 GWh, below the long-term average of 3,417 GWh and an
increase of 883 GWh compared to the prior year. The increase is attributable to the recent growth in our
portfolio, which resulted in incremental generation of 891 GWh, and a full year’s contribution from facilities
acquired in 2013 which resulted in incremental generation of 27 GWh.
Our 110 MW natural gas-fired plant in Ontario had been operating on an uncontracted basis since
April 2014. Since then, the facility has had nominal generation as a result of low power prices relative to
gas market prices. The operations at this facility have temporarily been suspended but remain available
to be restarted should economic conditions allow.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 19
The following table reflects Adjusted EBITDA, Funds From Operations, Adjusted Funds From
Operations, and provides a reconciliation to net income for the year ended December 31:
(MILLIONS, EXCEPT AS NOTED)
Revenues
Other income
Share of cash earnings from equity-accounted investments
Direct operating costs
Adjusted EBITDA(1)
Fixed earnings adjustment(2)
Interest expense – borrowings
Management service costs
Current income taxes
Less: cash portion of non-controlling interests
Participating non-controlling interests - in operating subsidiaries
Preferred equity
Funds From Operations(1)
Less: adjusted sustaining capital expenditures(3)
Adjusted Funds From Operations(1)
Add: cash portion of non-controlling interests
Add: adjusted sustaining capital expenditures
Less: fixed earnings adjustment
Other items:
Depreciation
Unrealized financial instruments gain
Share of non-cash loss from equity-accounted investments
Deferred income tax recovery
Other
Net income
Net income attributable to limited partners' equity
2014
1,704 $
10
26
(524)
1,216
11
(415)
(51)
(18)
(145)
(38)
560
(58)
502
183
58
(11)
(548)
10
(23)
29
3
203 $
58
$
2013
1,706
11
21
(530)
1,208
-
(410)
(41)
(19)
(107)
(37)
594
(56)
538
144
56
-
(535)
37
(12)
18
(31)
215
69
$
$
$
Basic and diluted earnings per LP Unit(4)
0.52
(1) Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures” and “Financial Review by Segments
0.42 $
$
for the Year Ended December 31, 2014”.
(2) The fixed earnings adjustment relates to Brookfield Renewable’s investment in the acquisition of the wind portfolio in Ireland.
Pursuant to the terms of the purchase and sale agreement, Brookfield Renewable acquired an economic interest in the wind
portfolio from January 1, 2014. The transaction closed on June 30, 2014, and accordingly under IFRS, the $11 million net Funds
From Operations contribution was recorded as part of the purchase price.
(3) Based on long-term sustaining capital expenditure plans.
(4) Average LP Units outstanding during the period totaled 138.8 million (2013: 132.9 million).
Revenues
totaled $1,704 million which represented a year-over-year decrease of $2
million. Strong merchant pricing and annual escalations in our power purchase agreements partially
offset lower year-over-year generation from existing U.S. hydroelectric facilities and a contractual
decrease in contract price at our Louisiana facility, the net negative impact of which was $46 million.
While total generation from our Canada hydroelectric portfolio was consistent with prior year,
stronger performance from facilities with higher relative contract prices contributed an incremental $9
million to our financial results.
In Brazil, revenues declined $14 million year-over-year as the impact of lower generation was
partially offset by our ability to capture strong merchant power pricing by keeping a portion of our output
uncontracted.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 20
While contributions from our existing wind portfolio were consistent with prior year, revenue from
our natural gas-fired plant in Ontario decreased $40 million reflecting limited operations throughout 2014.
The recent growth in our hydroelectric and wind portfolios and a full year’s contribution from
facilities acquired or commissioned in 2013 resulted in incremental revenues of $151 million.
The average total revenue per MWh of $77 is consistent with the prior year.
Direct operating costs totaling $524 million represent a year-over-year decrease of $6 million
attributable to the savings achieved from the cost efficiencies at our operations and the reduction in
power purchased in the open market for our co-generation facilities. The recent growth in our portfolio
and a full year’s costs from facilities acquired or commissioned in 2013 resulted in an incremental $46
million.
Pursuant to the terms of the purchase and sale agreement, our acquisition of the Irish wind
portfolio provided us with the economic benefit as of January 1, 2014, despite the transaction closing on
June 30, 2014. Accordingly, we have included $11 million in Funds From Operations for the first six
months of the year.
Interest expense totaling $415 million represents a year-over-year increase of $5 million.
Incremental interest costs related to financing the growth in our portfolio were $31 million, and $5 million
was related to up-financing activities. Repayment of certain subsidiary borrowings and corporate credit
facilities resulted in a $17 million decrease in borrowing costs.
Management service costs totaling $51 million represent a year-over-year increase of $10 million
primarily attributable to the increase in the market value of our LP Units and the issuance of 10.25 million
LP Units in the second quarter of 2014.
The cash portion of non-controlling interests totaling $183 million represents a year-over-year
increase of $39 million. An increase of $60 million related to the growth in our portfolio and the partial sale
of hydroelectric facilities in New England to institutional investors in the third quarter of 2013, was partly
offset by the overall decrease in performance from certain existing assets in our U.S. hydroelectric
portfolio.
Funds From Operations totaling $560 million incorporates growth of $26 million and the net
impact of the appreciation of the U.S. dollar of $24 million.
Net income was $203 million for the year ended December 31, 2014 (2013: Net income of $215
million) resulting in a basic and diluted earnings per LP Unit of $0.42 (2013: $0.52).
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 21
SEGMENTED DISCLOSURES
HYDROELECTRIC
The following table reflects the results of our hydroelectric operations for the year ended
December 31:
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA(1)(2)
Generation (GWh) – actual(1)(2)
Revenues
Adjusted EBITDA(3)
Funds From Operations(3)
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA(1)(2)
Generation (GWh) – actual(1)(2)
Revenues
Adjusted EBITDA(3)
Funds From Operations(3)
(1)
(2)
North America
United States
Canada
10,785
10,293
719
493
256
$
$
5,132
5,570
394
315
243
$
$
2014
Total
15,917
15,863
1,113
808
499
$
$
2013
Latin
America
3,614
3,371
$
$
265
198
149
North America
Latin
United States
Canada
Total
America
9,681
10,082
$
$
677
473
253
$
$
5,062
5,494
399
319
255
14,743
15,576
1,076
792
508
$
$
$
$
3,656
3,656
301
221
169
Total
19,531
19,234
1,378
1,006
648
Total
18,399
19,232
1,377
1,013
677
$
$
$
$
Includes 100% of generation from equity-accounted investments.
For assets acquired or reaching commercial operation during the year, this figure is calculated from the acquisition or
commercial operation date and is not annualized.
Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures”, and “Financial Review By
Segments For the Year Ended December 31, 2014”.
(3)
United States
Generation from the portfolio was 10,293 GWh for the year ended December 31, 2014, below the
long-term average of 10,785 GWh and above prior year generation of 10,082 GWh. Generation from
existing facilities decreased 704 GWh. Inflows returned to more normal levels at our facilities in
Tennessee, North Carolina and the eastern United States as compared to the prior year, which had
benefited from strong hydrological conditions and above long-term average generation. However, the
impact on results from this variance was reduced by the non-controlling interest in the Tennessee and
North Carolina facilities. Partly offsetting these decreases were the strong inflows at our New England
facilities. During the year we benefited from the merchant profile on our recently acquired facilities in New
England and Pennsylvania, and captured strong energy pricing. The recent growth in our portfolio and a
full year’s contribution from facilities acquired in 2013 resulted in incremental generation of 915 GWh.
Revenues totaling $719 million represent a year-over-year increase of $42 million. Revenues
were reduced by $54 million due to the decrease in generation from existing facilities, and a contractual
decrease in the price at our Louisiana facility. Favorable market prices at the uncontracted facilities in our
portfolio and the price escalators inherent in the power purchase agreements for certain of our facilities
contributed $8 million. The recent growth in our portfolio and a full year’s contribution from facilities
acquired in 2013 resulted in incremental revenues of $88 million.
Funds From Operations totaling $256 million incorporates growth of $6 million. The increase in
revenues from existing facilities and improved performance from our equity-accounted investments was
partly offset by the cash portion of non-controlling interests.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 22
Canada
Generation from the portfolio was 5,570 GWh for the year ended December 31, 2014, above the
long-term average of 5,132 GWh and slightly above the prior year generation of 5,494 GWh. We
experienced strong hydrological conditions, particularly at our facilities in Ontario. The facility in British
Columbia commissioned during the second quarter provided incremental generation of 68 GWh.
Revenues totaling $394 million represent a year-over-year decrease of $5 million. Stronger
performance from existing facilities with higher relative contract prices contributed an additional $9 million,
and the recently commissioned facility in British Columbia and a full year’s contribution from facilities
acquired in 2013 resulted in incremental revenues of $12 million.
Funds From Operations totaling $243 million represent a year-over-year decrease of $12 million.
The decrease in revenues and higher borrowing costs associated with up-financing initiatives were partly
offset by the cost efficiencies at our operations. The appreciation of the U.S. dollar impacted revenues by
$26 million, but also affected costs and other expenses resulting in a net decrease in Funds From
Operations of $17 million.
Brazil
Generation from the portfolio was 3,371 GWh for the year ended December 31, 2014 below prior
year generation of 3,656 GWh and the long-term average of 3,614 GWh. The decrease is primarily
attributable to the drought-like conditions experienced in the year; however, the impact was mitigated by
our participation in the hydrological balancing pool. The optionality maintained in the portfolio allowed us
to benefit from the strong power pricing environment and help offset the effects of the lower generation.
During the year we secured 3 – 5 year contracts for 567 GWh at prices ranging from R$190 – R$270 per
MWh, significantly above existing contracts expiring in the near term. A full year’s contribution from a
facility commissioned in 2013 provided an incremental 59 GWh of generation.
Revenues totaling $265 million represent a year-over-year decrease of $36 million. Strong power
pricing was offset by the effects of the lower volumes.
Funds From Operations totaling $149 million represent a year-over-year decrease of $20 million.
The appreciation of the U.S. dollar impacted revenues by $25 million, but also affected costs and other
expenses resulting in a net decrease in Funds From Operations of $14 million.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 23
WIND
The following table reflects the results of our wind operations for the year ended December 31:
(MILLIONS, EXCEPT AS NOTED)
United States
North America
Canada
Generation (GWh) – LTA(1)(2)
Generation (GWh) – actual(1)(2)
Revenues
Adjusted EBITDA(3)
Funds From Operations(3)
$
$
1,394
1,170
129
86
13
1,197
1,042
123
105
$
67
$
$
$
(MILLIONS, EXCEPT AS NOTED)
United States
North America
Canada
1,341
1,145
$
125
$
82
1,197
1,075
133
111
Generation (GWh) – LTA(1)(2)
Generation (GWh) – actual(1)(2)
Revenues
Adjusted EBITDA(3)
Funds From Operations(3)
(1)
(2)
2014
Total
2,591
2,212
252
191
80
$
$
2013
Total
2,538
2,220
Latin
America
Europe
N/A
N/A
N/A
N/A
N/A
$
$
826
891
45
29
18
Latin
America
Europe
N/A
N/A
N/A
N/A
$
N/A
N/A
N/A
N/A
$
$
258
193
Total
3,417
3,103
297
220
98
Total
2,538
2,220
258
193
$
$
$
$
67
Includes 100% of generation from equity-accounted investments.
For assets acquired or reaching commercial operation during the year, this figure is calculated from the acquisition or
commercial operation date and is not annualized.
Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures”, and “Financial Review By
Segments For the Year Ended December 31, 2014”.
N/A
N/A
85
18
85
$
$
$
$
$
(3)
United States
Generation from the portfolio was 1,170 GWh for the year ended December 31, 2014, below the
long-term average of 1,394 GWh due to lower wind conditions across the portfolio, and consistent with
prior year generation of 1,145 GWh. A full year’s contribution from the facilities acquired in 2013 resulted
in incremental generation of 27 GWh.
Revenues totaling $129 million represent a year-over-year increase of $4 million primarily
attributable to the full year’s contribution from the facilities acquired in 2013.
Funds From Operations totaling $13 million represent a year-over-year decrease of $5 million,
primarily attributable to the increase in non-controlling interests.
Canada
Generation from our Canadian wind portfolio was 1,042 GWh, below the long-term average of
1,197 GWh and prior year generation of 1,075 GWh, all attributable to lower wind conditions. Generation
at one of our facilities was curtailed, reducing generation by 29 GWh, for which we received
compensation at the power purchase agreement price.
Revenues totaling $123 million represent a year-over-year decrease of $10 million, primarily
attributable to the appreciation of the U.S. dollar.
Funds From Operations totaling $67 million was consistent year-over-year. The decrease in
revenues was offset by cost efficiencies at our operations.
Europe
Generation from our wind portfolio in Ireland was 891 GWh for the year ended December 31,
2014. We substantially completed construction on two Irish wind facilities totaling 125 MW. The facilities
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 24
generated 125 GWh in 2014 and received payments under power purchase agreements. These facilities,
which are expected to generate 349 GWh annually, were fully commissioned in Q1 2015.
Revenues totaled $45 million for the year ended December 31, 2014 and included a $12 million
contribution from the two development projects.
Funds From Operations totaling $18 million includes an $11 million fixed earnings adjustment
amount for the period from January 1, 2014 to June 30, 2014.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 25
ANALYSIS OF CONSOLIDATED FINANCIAL STATEMENTS AND OTHER INFORMATION
PROPERTY, PLANT AND EQUIPMENT
In accordance with IFRS, Brookfield Renewable has elected to revalue its property, plant and
equipment at a minimum on an annual basis, as at December 31st of each year. Substantially all of
Brookfield Renewable’s property, plant and equipment, are carried at fair value as opposed to historical
cost, using a 20-year discounted cash flow model. This model incorporates future cash flows from long-
term power purchase agreements that are in place where it is determined that the power purchase
agreements are linked specifically to the related power generating assets. The model also includes
estimates of future electricity prices, anticipated long-term average generation, estimated operating and
capital expenditures, and assumptions about future inflation rates and discount rates by geographical
location. For power generating assets acquired through business combinations during the year,
Brookfield Renewable initially measures the assets at fair value consistent with the policy described in
Note 2(l) – Business combinations in our audited consolidated financial statements. Accordingly, in the
year of acquisition, power generating assets are not revalued at year-end unless there is an indication
that assets are impaired.
Property, plant and equipment, at fair value totaled $18.4 billion as at December 31, 2015 as
compared to $18.6 billion as at December 31, 2014. During the year ended December 31, 2015, the
acquisition of 163 MW of hydroelectric facilities, 273 MW of wind facilities, 175 MW of biomass facilities,
and a wind development pipeline of approximately 1,200 MW totaled $1,160 million. The development
and construction of power generating assets totaled $289 million. The 102 MW wind facility in California
sold during the year had been recorded at a carrying amount of $230 million. The revaluation of property,
plant and equipment resulted in an increase in fair value of $1,164 million. Property, plant and equipment
were impacted by foreign currency changes related to the appreciation of the U.S. dollar in the amount of
$1,975 million. We also recognized depreciation expense of $616 million which is significantly higher than
what we are required to reinvest in the business as sustaining capital expenditures.
Fair value of property, plant and equipment can vary with discount and terminal capitalization
rates. Excluding power generating assets acquired during the year ended December 31, 2015, the
following table summarizes the impact of a change in discount rates, electricity prices and terminal
capitalization rates on the fair value of property, plant and equipment as at December 31:
(BILLIONS)
50 bps increase in discount rates
50 bps decrease in discount rates
5% increase in future electricity prices
5% decrease in future electricity prices
50 bps increase in terminal capitalization rate(1)
50 bps decrease in terminal capitalization rate(1)
(1)
$
$
2015
(1.3)
1.6
0.6
(0.6)
(0.4)
0.4
2014
(1.3)
1.5
0.5
(0.5)
(0.3)
0.4
The terminal capitalization rate applies only to hydroelectric assets in North America.
Terminal values are included in the valuation of hydroelectric assets in North America. For the
hydroelectric assets in Latin America, cash flows have been included based on the duration of the
authorization or useful life of a concession asset without consideration of potential renewal value. The
weighted-average remaining duration of the authorization or useful life of a concession asset at
December 31, 2015, was 18 years (2014: 15 years). Consequently, there is no terminal value attributed to
the hydroelectric assets in Latin America. If an additional 20 years of cash flows were included in Latin
America, the fair value of property, plant and equipment would increase by approximately $1 billion. See
Note 12 - Property, plant and equipment, at fair value in our audited consolidated financial statements.
Brookfield Renewable’s long-term view is anchored to the cost of securing new energy from
renewable sources to meet future demand growth. Based on current supply and demand fundamentals,
Brookfield Renewable has revised the year of new entry to 2023 from 2020. A further one year change
would increase or decrease the fair value of property, plant and equipment by approximately $60 million.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 26
LIQUIDITY AND CAPITAL RESOURCES
Capitalization
A key element of our financing strategy is to raise the majority of our debt in the form of asset-
specific, non-recourse borrowings at our subsidiaries on an investment grade basis. The debt to total
capitalization ratio improved from December 31, 2014 due primarily to the impact of the appreciation of
the U.S. dollar on foreign denominated net assets.
The following table summarizes the total capitalization and debt to total capitalization using book
values as at December 31:
(MILLIONS, EXCEPT AS NOTED)
Credit facilities(1)
Corporate borrowings(1)
Subsidiary borrowings(2)
Long-term indebtedness
Deferred income tax liabilities, net of deferred income tax assets
Equity
Total capitalization
$
2015
368
$
1,368
5,602
7,338
2,538
8,763
$
18,639
$
39%
2014
401
1,286
5,991
7,678
2,495
8,881
19,054
40%
Debt to total capitalization
(1)
(2)
Issued by a subsidiary of Brookfield Renewable and guaranteed by Brookfield Renewable. The amounts are unsecured.
Issued by subsidiaries of Brookfield Renewable and secured against their respective assets. The amounts are not
guaranteed.
During the year ended December 31, 2015 we completed the following financings:
Credit facilities
In May 2015, we extended the maturity of our corporate credit facilities by one year to June 2020
and also expanded the available amount to $1,310 million from $1,280 million.
In November and December 2015, we further expanded the available amount to $1,560 million.
Corporate borrowings
In March 2015, we issued C$400 million ($317 million) of medium-term corporate notes, maturing
in June 2025 at a fixed rate of 3.75%. Transaction costs of $1 million were incurred. Proceeds of the
offering were used to repay existing indebtedness and for general corporate purposes.
Subsidiary borrowings
In February 2015, we secured an 18-month extension on $75 million of debt associated with a
portfolio of hydroelectric and wind facilities in the United States held through the Brookfield Americas
Infrastructure Fund. The debt bears interest at LIBOR plus 2.75%, and matures in August 2016.
In February 2015, as part of the acquisition of a 123 MW wind portfolio in Portugal, we assumed
loans with principal balances totaling €99 million ($109 million). The loans bear interest at an initial
weighted-average fixed rate of 6.28%, including the related interest rate swaps, and have a weighted-
average remaining term of 9.5 years.
In March 2015, as part of the acquisition of a 313 MW operating renewable power generation
portfolio in Brazil comprising of 43 MW of hydroelectric, 150 MW of wind, and 120 MW of biomass
generating capacity and a 55 MW biomass development project, we assumed R$631 million ($197
million) of debt with a combination of variable and fixed interest rates, and a weighted-average remaining
term of 12.7 years.
In May 2015, as part of the acquisition of a 120 MW hydroelectric facility in Brazil, we assumed
R$254 million ($83 million) of debt with variable interest rates of the Brazilian Interbank Deposit
Certificate rate plus 0.5% and 2.0%, and a weighted-average remaining term of 7.6 years.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 27
Effective June 30, 2015, the margin on C$194 million ($155 million) of debt associated with a 189
MW wind facility in Ontario was reduced from 2.25% to 1.625%.
The final drawdown of €20 million ($22 million) was made in July 2015 on the construction and
term loan associated with 137 MW of wind projects in Ireland, bringing the total draw to €188 million
($227 million) at a weighted average rate of 2.74% and maturing in December 2027.
Effective July 31, 2015, the margin on C$119 million ($95 million) of debt associated with a 51
MW wind facility in Ontario was reduced from 2.25% to 1.625%, and the debt was up-financed by C$7
million ($5 million).
In September 2015, we secured financing in the amount of R$187 million ($47 million) with
respect to 90 MW of biomass capacity in Brazil, of which we drew R$139 million ($35 million). The loan
bears interest at a floating interest rate of the TJLP’s rate plus 1.4%, and matures in October 2035.
Equity-accounted investments
In February 2015, our equity-accounted investee with a 45 MW hydroelectric facility in British
Columbia refinanced indebtedness by issuing C$90 million ($76 million) of bonds with an interest rate of
2.95%, maturing in May 2023. We own a 50%, equity-accounted interest in this facility.
In October 2015, our equity-accounted investee with a 600 MW pumped storage and 10 MW
hydroelectric facilities in New England completed a $400 million bond financing. The bond matures in
2025, and bears interest at a fixed interest rate of 4.89% on $375 million and a floating interest rate of
LIBOR plus a margin of 270 basis points on the remaining $25 million. Simultaneously, the equity-
accounted investee also completed a $26 million letter of credit and working capital facility with a three-
year term and a floating interest rate of LIBOR plus a margin of 170 basis points. We own a 50%, equity-
accounted interest in this facility.
Available liquidity
We operate with sufficient liquidity to enable us to fund growth initiatives, capital expenditures,
distributions, withstand sudden adverse changes in economic circumstances or short-term fluctuations in
generation, and to finance the business on an investment grade basis. Principal sources of liquidity are
cash flows from operations and proceeds from the issuance of securities through public markets and
private capital.
The following table summarizes the available liquidity as at December 31:
(MILLIONS)
Cash and cash equivalents
Credit facilities
Authorized credit facilities
Draws on credit facilities(1)
Issued letters of credit
Available portion of credit facilities
Available liquidity
(1)
$
2015
63 $
1,760
(368)
(218)
1,174
$
1,237 $
2014
150
1,480
(401)
(227)
852
1,002
Amounts are unsecured and revolving. Interest rate is at the LIBOR plus 1.20% (December 31, 2014: 1.20%).
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 28
December 31, 2015:
(MILLIONS)
Principal repayments
Subsidiary borrowings(1)
North America
United States
Canada
Latin America
Europe
Corporate borrowings and
credit facilities(1)
Equity-accounted investments
Interest payable(2)
Subsidiary borrowings
United States
Canada
Brazil
Europe
Corporate borrowings and
credit facilities
Equity-accounted investments
Long-term debt and credit facilities
The following table summarizes our undiscounted principal repayments and interest payable as at
2016
2017
2018
2019
2020 Thereafter
Total
$ 355 $ 778 $ 770 $
59 $
23 $ 1,218 $
117
472
28
53
45
823
28
48
553
899
217
-
-
1
48
818
38
51
907
145
6
174
197
36
61
1,041
2,259
178
363
46
105
39
55
199
294
2,800
5,652
3,203
1,471
4,674
347
631
-
5
692
6
687
415
1,741
433
$ 770 $ 900 $ 1,058 $ 204 $ 992 $ 3,902 $
7,826
166
158
115
81
30
24
75
27
22
73
24
20
89
70
21
18
84
68
17
16
301
282
232
198
185
503
392
59
45
999
171
89
1,115
759
178
145
2,197
469
189
74
15
60
20
390
362
60
25
317
53
20
271
51
20
256
1,259
2,855
(1)
(2)
Subsidiary borrowings and corporate borrowings and credit facilities include $4 million and $59 million of unamortized
premiums and deferred financing fees, respectively.
Represents aggregate interest payable expected to be paid over the entire term of the obligations, if held to maturity. Variable
rate interest payments have been calculated based on estimated interest rates.
$ 1,160 $ 1,262 $ 1,375 $ 475 $ 1,248 $ 5,161 $ 10,681
Subsidiary and corporate borrowings maturing in 2016 are expected to be refinanced at or in
advance of maturity. Maturities of borrowings in 2016 include a tranche of our medium-term corporate
notes, subsidiary borrowings on our portfolio of hydroelectric facilities in Tennessee and North Carolina
and British Columbia, and debt associated with a portfolio of hydroelectric and wind facilities in the United
States held through the Brookfield Americas Infrastructure Fund.
We remain focused on refinancing near term facilities on acceptable terms and maintaining a
manageable maturity ladder. We do not anticipate material issues in addressing our borrowings through
2020 on acceptable terms and will do so opportunistically based on the prevailing interest rate
environment.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 29
The overall maturity profile and average interest rates associated with our borrowings and credit
facilities as at December 31 are as follows:
Corporate borrowings
Subsidiary borrowings
Credit facilities
Average term (years) Average interest rate (%)
Dec 31
2015
Dec 31
Dec 31
2014
2015
Dec 31
2014
6.5
9.3
4.5
6.7
10.4
4.5
5.0
5.5
1.4
5.3
5.3
1.4
During the year ended December 31, 2015, we issued C$400 million ($317 million) of medium-
term corporate notes maturing in June 2025, reducing our overall costs on corporate borrowings from
5.3% to 5.0% and also increasing the average term.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 30
CONTRACT PROFILE
We have a largely predictable profile driven by both long-term power purchase agreements with a
weighted-average remaining duration of 17 years combined with a well-diversified portfolio that reduces
variability in our generation volumes. We operate the business on a largely contracted basis to ensure a
high degree of predictability in Funds From Operations. We do however maintain a long-term view that
electricity prices and the demand for electricity from renewable sources will rise due to a growing level of
acceptance around climate change and the legislated requirements in some areas to diversify away from
fossil fuel based generation.
The following table sets out contracts over the next five years for generation output assuming
long-term average:
FOR THE YEAR ENDED DECEMBER 31
Generation (GWh)
Contracted(1)
Hydroelectric
North America
United States(2)
Canada
Latin America
Wind
North America
United States
Canada
Latin America
Europe
Other
Uncontracted
Total long-term average
Long-term average on a proportionate basis(3)
Contracted generation - as at December 31, 2015
% of total generation
% of total generation on a proportionate basis(3)
2016
2017
2018
2019
2020
9,487
4,681
14,168
3,606
17,774
1,010
1,197
2,207
560
1,433
4,200
481
22,455
3,358
25,813
19,360
9,283
4,634
13,917
3,271
17,188
1,010
1,197
2,207
560
1,433
4,200
486
21,874
3,987
25,861
19,384
7,000
4,634
11,634
2,973
14,607
1,010
1,197
2,207
560
1,433
4,200
534
19,341
6,520
25,861
19,387
7,000
4,624
11,624
2,961
14,585
1,010
1,197
2,207
560
1,433
4,200
534
19,319
6,542
25,861
19,385
7,000
3,043
10,043
2,712
12,755
1,010
1,197
2,207
560
1,295
4,062
534
17,351
8,809
26,160
19,582
87%
90%
71 $
85%
88%
69 $
75%
82%
74 $
75%
82%
75 $
66%
71%
78
Price per MWh - total generation
Price per MWh - total generation on a
proportionate basis
(1)
$
77
Assets under construction are included when long-term average and pricing details are available and the commercial
operation date is established in a definitive construction contract.
Includes generation of 2,487 GWh for 2016 and 2,283 GWh for 2017 secured under financial contracts.
Long-term average on a proportionate basis includes wholly-owned assets, and our share of partially-owned assets and
equity-accounted investments.
73
70
71
74
(2)
(3)
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 31
The following changes were made to the contract profile for the year ended December 31, 2015:
•
•
•
Included power purchase agreements associated with the acquisition of the 488 MW multi-
technology renewable energy portfolio in Brazil and the 123 MW wind portfolio in Portugal
Included power purchase agreements associated with our commissioned 12 MW wind facility in
Ireland
Included long-term contracts for two hydroelectric development projects in Brazil, representing 53
MW of generating capacity
• Eliminated the contract for the 102 MW wind facility in California which was sold at the beginning
of the third quarter of 2015
We remain focused on re-contracting our generation on acceptable terms, once their terms
expire, and will do so opportunistically at prices aligned with or above our long term view.
The majority of the long-term power purchase agreements are with investment-grade rated or
creditworthy counterparties. The composition of our contracted generation under power purchase
agreements is comprised of Brookfield (42%), public power authorities (24%), industrial users (23%) and
distribution companies (11%).
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 32
SUMMARY CONSOLIDATED BALANCE SHEETS
The following table provides a summary of the key line items on the consolidated balance sheets
as at December 31:
(MILLIONS)
Property, plant and equipment, at fair value
Equity-accounted investments
Total assets
Long-term debt and credit facilities
Deferred income tax liabilities
Total liabilities
Participating non-controlling interests - in operating subsidiaries
General partnership interest in a holding subsidiary held by Brookfield
Participating non-controlling interests - in a holding subsidiary -
Redeemable/Exchangeable units held by Brookfield
Preferred equity
Preferred limited partners' equity
Limited partners' equity
Total liabilities and equity
CONTRACTUAL OBLIGATIONS
Development and construction
2015
$
18,358
$
197
19,507
7,338
2,695
10,744
2,587
52
2,559
610
128
2,827
19,507
2014
18,566
273
19,849
7,678
2,637
10,968
2,062
59
2,865
728
-
3,167
19,849
The remaining development project costs on three Brazilian hydroelectric projects totaling 72
MW, a 55 MW biomass facility in Brazil, and a 14 MW wind project in Northern Ireland are expected to be
$193 million. The biomass facility and the wind project are expected to be fully operational in 2016. Two
hydroelectric projects with a combined capacity of 53 MW are expected to be fully operational in 2017,
and the 19 MW hydroelectric project is expected to be fully operational in 2018. In the fourth quarter of
2015, we entered into a construction agreement in regards to a 15 MW wind development project in
Northern Ireland. Costs associated with the project are expected to be $30 million. Construction is
expected to commence in the first quarter of 2016.
Commitments and contingencies
In July 2015, we entered into an agreement to acquire two hydroelectric facilities in Brazil with an
aggregate capacity of 51 MW and expected to generate 293 GWh. We completed the acquisition in
January 2016 - refer to “Subsequent Events” - and will retain a 100% interest in these facilities.
In October 2015, we entered into an agreement to acquire two hydroelectric facilities in
Pennsylvania with an aggregate capacity of 292 MW. The facilities are expected to generate 1,109 GWh
annually. We are pursuing this transaction with our institutional partners, and expect to retain an
approximate 40% controlling interest in the facilities. The transaction is expected to close in the first
quarter of 2016, subject to typical closing conditions.
In January 2016 we and our institutional partners acquired an approximate 57.6% controlling
interest in Isagen from the Colombian government; refer to “Subsequent Events”. Our initial economic
interest in Isagen is 9% after accounting for the non-controlling interests of its institutional partners.
Following the closing of the acquisition our consortium is required to conduct two tender offers with
respect to the remaining Isagen shares. If our consortium is successful in acquiring the remaining
outstanding Isagen shares, Brookfield Renewable’s interest in Isagen would then increase to
approximately 23%.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 33
As at December 31, 2015, we had commitments for future minimum lease payments under non-
cancellable leases which fall due as follows:
(MILLIONS)
2016
2017
2018
2019
2020
Thereafter
Total
$
$
24
22
20
20
18
191
295
Brookfield Renewable, on behalf of its subsidiaries, and subsidiaries themselves have provided
letters of credit, which include, but are not limited to, guarantees for debt service reserves, capital
reserves, construction completion and performance. See “Liquidity and Capital Resources” for further
details.
Brookfield Renewable, along with institutional investors, has provided letters of credit, which
include, but are not limited to, guarantees for debt service reserves, capital reserves, construction
completion and performance as it relates to interests in the Brookfield Americas Infrastructure Fund and
the Brookfield Infrastructure Fund II. As at December 31, 2015, the letters of credit issued were $71
million (2014: $125 million).
Brookfield Renewable’s equity-accounted entities have similarly provided letters of credit, which
include, but are not limited to, guarantees for debt service reserves, capital reserves, construction
completion and performance. As at December 31, 2015, letters of credit issued by Brookfield
Renewable’s equity-accounted entities were $16 million (2014: nil).
An integral part of our strategy is to participate with institutional investors in Brookfield-sponsored
infrastructure funds that target acquisitions that suit Brookfield Renewable’s profile. In the normal course
of business, Brookfield Renewable has made commitments to Brookfield-sponsored infrastructure funds
to fund these target acquisitions in the future, if and when identified.
Guarantees
In the normal course of operations, we execute agreements that provide for indemnification and
guarantees to third parties in transactions such as acquisitions, construction projects, capital projects, and
purchases of assets. We have also agreed to indemnify our directors and certain of our officers and
employees. The nature of the indemnities prevent us from making a reasonable estimate of the maximum
potential amount that could be required to pay third parties, as many of the agreements do not specify a
maximum amount and the amounts are dependent upon the outcome of future contingent events, the
nature and likelihood of which cannot be determined at this time. Historically, we have made no
significant payments under indemnification agreements.
OFF-BALANCE SHEET ARRANGEMENTS
Brookfield Renewable has no off-balance sheet financing arrangements.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 34
RELATED PARTY TRANSACTIONS
Brookfield Renewable’s related party transactions are in the normal course of business, and are
recorded at the exchange amount. Brookfield Renewable’s related party transactions are primarily with
Brookfield.
Brookfield Renewable sells electricity
long-term power purchase
agreements to provide contracted cash flow and reduce Brookfield Renewable’s exposure to electricity
prices in deregulated power markets. Brookfield Renewable also benefits from a wind levelization
agreement with Brookfield which reduces the exposure to the fluctuation of wind generation at certain
facilities and thus improves the stability of its cash flow.
to Brookfield
through
In addition to these agreements, Brookfield Renewable and Brookfield have executed other
agreements that are described in Note 10 - Related Party Transactions in our audited consolidated
financial statements.
Brookfield Renewable has also entered into a number of voting agreements with Brookfield
whereby Brookfield, as managing member of entities related to Brookfield Americas Infrastructure Fund
and Brookfield Infrastructure Fund II, in which Brookfield Renewable holds investments in power
generating operations with institutional partners, agreed to provide to Brookfield Renewable the authority
to direct the election of the Boards of Directors of such entities.
The following table reflects the related party agreements and transactions on the consolidated
statements of income, for the year ended December 31:
(MILLIONS)
Revenues
Power purchase and revenue agreements
Wind levelization agreement
Direct operating costs
Energy purchases
Energy marketing fee
Insurance services
Management service costs
2015
2014
2013
469 $
433 $
6
6
475 $
439 $
(5) $
(9) $
(22)
(30)
(57) $
(48) $
(21)
(29)
(59) $
(51) $
456
6
462
(36)
(20)
(26)
(82)
(41)
$
$
$
$
$
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 35
Revenues from power purchase and revenue agreements for the year ended December 31, 2015
were higher as compared to the prior year. The increase is primarily due to an increased level of price
support, reflecting the relatively lower pricing environment in the first quarter of 2015, and the impact of
power purchase agreements for certain recently acquired facilities.
The following table reflects the impact of the related party agreements and transactions on the
consolidated balance sheets as at December 31:
Related party
2015
2014
(MILLIONS)
Current assets
Due from related parties
Amounts due from
Current liabilities
Due to related parties
Amount due to
Brookfield
Equity accounted investments and other
Brookfield
$
$
$
52 $
5
57 $
54
9
63
41 $
56
23
-
$
64 $
21
2
79
Accrued distributions payable on LP
Units and Redeemable/Exchangeable
partnership units
Amount due to
Brookfield
Equity accounted investments and other
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 36
CONSOLIDATED STATEMENTS OF CASH FLOWS
The following table summarizes the key items on the consolidated statements of cash flows, for
the year ended December 31:
(MILLIONS)
Cash flow provided by (used in):
Operating activities
Financing activities
Investing activities
Foreign exchange loss on cash
2015
2014
2013
$
588 $
700 $
(33)
(623)
(19)
1,299
(2,037)
(15)
735
(263)
(397)
(9)
66
(Decrease) increase in cash and cash equivalents
$
(87) $
(53) $
Cash and cash equivalents as at December 31, 2015 totaled $63 million, representing a decrease
of $87 million since December 31, 2014.
Operating Activities
Cash flows provided by operating activities totaling $588 million for the year ended December 31,
2015 represent a year-over-year decrease of $112 million primarily attributable to the decrease in Funds
From Operations and changes in working capital balances.
Cash flows provided by operating activities totaling $700 million for the year ended December 31,
2014 represent a year-over-year decrease of $35 million primarily attributable to the decrease in Funds
From Operations.
Net change in working capital
The net change in working capital balances shown in the consolidated statements of cash flows
for the year ended December 31 is comprised of the following:
(MILLIONS)
Trade receivables and other current assets
Accounts payable and accrued liabilities
Other assets and liabilities
Financing Activities
2015
(72)
2
8
(62)
$
$
2014
20
$
(54)
14
(20)
$
2013
47
(42)
(4)
1
$
$
Cash flows used in financing activities totaled $33 million for the year ended December 31, 2015.
Long-term debt – borrowings were $944 million, and related to the growth in our portfolio and the
issuance of medium-term corporate notes during the first quarter. Long-term debt – repayments related to
subsidiary borrowings and credit facilities were $855 million. The capital provided by participating non-
controlling interests – in operating subsidiaries relates to the growth in our portfolio, and amounted to
$460 million. The issuance of 7,000,000 Class A, Series 7 Preferred LP Units at a price of C$25 per unit
resulted in net proceeds of $128 million.
For the year ended December 31, 2015, distributions paid to LP Unitholders were $461 million
(2014: $480 million). We increased our distributions to $1.66 per LP Unit, an increase of 11 cents per LP
Unit which took effect in the first quarter. The amounts paid in the first quarter of 2014 included
distributions declared in both that quarter, and in the fourth quarter of 2013. The distributions paid to
preferred shareholders and participating non-controlling interests - in operating subsidiaries were $239
million (2014: $188 million). See “Dividends and Distributions” for further details.
Cash flows provided by financing activities totaled $1,299 million for the year ended December
31, 2014. Long-term debt – borrowings were $2,118 million and increased due to the growth in our
portfolio, up-financing indebtedness associated with a 349 MW Ontario hydroelectric portfolio, a $560
million financing associated with a 417 MW hydroelectric facility in Pennsylvania, and financings totaling
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 37
€328 million ($413 million) associated with the wind facilities and development projects in Ireland. Long-
term debt – repayments related to subsidiary borrowings and credit facilities were $1,046 million. The
issuance of 10,250,000 LP Units at a price of C$31.70 per LP Unit resulted in net proceeds of $285
million. The capital provided by participating non-controlling interests – in operating subsidiaries relates to
the growth in our portfolio, and amounted to $610 million.
For the year ended December 31, 2014, distributions paid to LP Unitholders were $480 million
(2013: $378 million). With the change in timing of our quarterly distributions taking effect in the first
quarter of 2014 resulting in a distribution on January 31, 2014 and on March 31, 2014, the amounts paid
in the first quarter of 2014 included distributions declared in both the fourth quarter of 2013 and the first
quarter of 2014. Distributions paid in the first quarter of 2013 included only those declared in the
preceding quarter. Further, we increased our distributions to $1.55 per LP Unit, an increase of 10 cents
per LP Unit which took effect in the first quarter of 2014. The distributions paid to preferred shareholders
and participating non-controlling interests - in operating subsidiaries were $188 million (2013: $157
million). See “Dividends and Distributions” for further details.
Investing Activities
Cash flows used in investing activities for the year ended December 31, 2015 totaled $623
million. Our investments were with respect to the acquisition of a 488 MW renewable power portfolio in
Brazil, a 123 MW wind portfolio in Portugal, and a wind development pipeline of approximately 1,200 MW
in Scotland. When combined, these investments totaled $663 million. Proceeds from the sale of the 102
MW wind facility in California were $143 million. Our continued investment in the development and
construction of power generating assets was $209 million and sustainable capital expenditures totaled
$76 million. Capital distributions received from our equity-accounted investments were $144 million.
Cash flows used in investing activities for the year ended December 31, 2014 totaled $2,037
million. Our investments were with respect to the acquisition of a hydroelectric facility in Pennsylvania, a
wind portfolio in Ireland, a hydroelectric portfolio in Maine, and the remaining 50% interest previously held
by our partner in a hydroelectric facility in California. When combined, these investments totaled $1,838
million. In addition, our continued investment in the construction of power generating assets was $78
million and sustainable capital expenditures totaled $108 million.
NON-CONTROLLING INTERESTS
Preferred equity
On April 1, 2015, the fixed dividend rate on the Series 1 Preference Shares for the five years
commencing May 1, 2015 and ending April 30, 2020 was reset and, if declared, will be paid at an annual
rate of 3.355% (C$0.2096875 per share per quarter). The holders of 4,518,289 Series 1 Preference
Shares exercised their right to convert their shares into Class A, Series 2 Preference Shares on a one-
for-one basis. The holders of the Series 2 Preference Shares will be entitled to receive floating rate
cumulative preferential cash dividends, equal to the T-Bill Rate plus 2.62%. The quarterly dividend in
respect of the November 1, 2015 to January 31, 2016 dividend period was paid on January 31, 2016 at
an annual rate of 3.03% (C$0.19112 per share).
On June 23, 2015, we announced that the Toronto Stock Exchange had accepted a notice of
Brookfield Renewable Power Preferred Equity Inc. (“BRP Equity”)’s intention to commence a normal
course issuer bid in connection with its outstanding Class A Preference Shares. Under this normal course
issuer bid, we are permitted to repurchase up to 10% of the total public float for each respective series of
our Class A Preference Shares. Repurchases were authorized to commence on June 26, 2015 and will
terminate on June 25, 2016, or earlier should Brookfield Renewable complete its repurchases prior to
such date.
For the period ended December 31, 2015, 78,537 Class A, Series 1, Series 2 and Series 3
Preference Shares were repurchased at a cost of $1 million, and cancelled.
Class A, Series 5 Preference Shares – Exchange offer
In November 2015, we announced our offer to exchange (the “Exchange Offer”) each issued and
outstanding Class A, Series 5 Preference Share of BRP Equity with an annual dividend rate of 5.0% (the
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 38
“Series 5 Preference Shares”) for one newly issued Class A, Series 5 Preferred LP Unit of Brookfield
Renewable with an annual distribution rate of 5.59%.
The Exchange Offer was open for acceptance until, and completed on, February 8, 2016. On that
date, a total of 2,885,496 Series 5 Preference Shares were tendered and exchanged for an equal number
of Series 5 Preferred LP Units; refer to “Subsequent Events”.
General partnership interest in a holding subsidiary held by Brookfield
Brookfield, as the owner of the 1% GP interest in BRELP, is entitled to regular distributions plus
an incentive distribution based on the amount by which quarterly LP Unit distributions exceed specified
target levels. To the extent that LP Unit distributions exceed $0.375 per LP Unit per quarter, the incentive
is 15% of distributions above this threshold. To the extent that quarterly distributions exceed $0.4225 per
LP Unit, the incentive distribution is equal to 25% of distributions above this threshold. Accordingly,
incentive distributions of $8 million were made during the year ended December 31, 2015 (2014: $2
million).
Participating non-controlling interests - in a holding subsidiary - Redeemable/Exchangeable units
held by Brookfield
BRELP has issued Redeemable/Exchangeable partnership units to Brookfield, which may at the
request of the holder, require BRELP to redeem these units for cash consideration. The right is subject to
Brookfield Renewable’s right of first refusal which entitles it, at its sole discretion, to elect to acquire all of
the units presented to BRELP that are tendered for redemption in exchange for LP Units. If Brookfield
Renewable elects not to exchange the Redeemable/Exchangeable partnership units for LP Units, the
Redeemable/Exchangeable partnership units are required to be redeemed for cash. As Brookfield
Renewable, at its sole discretion, has the right to settle the obligation with LP Units, the
Redeemable/Exchangeable partnership units are classified as equity, and not as a liability.
PREFERRED LIMITED PARTNERS’ EQUITY
In November 2015, Brookfield Renewable issued 7,000,000 Class A, Series 7 Preferred LP Units
at a price of C$25 per unit for gross proceeds of C$175 million ($132 million). Transaction costs of $4
million were incurred. The holders of the Series 7 Preferred LP Units will be entitled to receive fixed
cumulative quarterly distributions at an annual rate of C$1.375 per unit, a yield of 5.5%, for the initial
period ending on January 31, 2021. Thereafter, the distribution rate will be reset every five years at a rate
equal to the greater of (i) the 5-year Government of Canada bond yield plus 4.47%, and (ii) 5.5%. The
Series 7 Preferred LP Units are redeemable on or after January 31, 2021.
The holders of Series 7 Preferred LP Units will have the right, at their option, to convert their
Series 7 Preferred LP Units into Class A, Series 8 Preferred LP Units, subject to certain conditions, on
January 31, 2021 and every five years thereafter. The holders of Series 8 Preferred LP Units will be
entitled to receive cumulative quarterly floating distributions, as and when declared, at an annual rate
equal to the 3-month Government of Canada Treasury Bills yield plus 4.47%.
The Class A Preferred LP Units do not have a fixed maturity date and are not redeemable at the
option of the holders. As at December 31, 2015, none of the Class A Preferred LP Units have been
redeemed by Brookfield Renewable.
LIMITED PARTNERS’ EQUITY
Brookfield Asset Management owns, directly and indirectly, 169,685,609 LP Units and
Redeemable/Exchangeable partnership units, representing approximately 62% of Brookfield Renewable
on a fully-exchanged basis.
We commenced a normal course issuer bid on December 29, 2014 to repurchase up to 7.1
million LP Units, representing approximately 5% of the issued and outstanding LP Units, for capital
management purposes. We repurchased and cancelled 340,289 LP Units during the year ended
December 31, 2015 at a cost of $9 million under the normal course issuer bid (refer to Note 21 - Limited
partners’ equity in our December 31, 2015 consolidated financial statements). In December 2015, we
renewed the normal course issuer bid and the authorization to repurchase up to 7.1 million LP Units will
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 39
expire on December 28, 2016, or earlier should Brookfield Renewable complete its repurchases prior to
such date.
SHARES AND UNITS OUTSTANDING
The shares and units outstanding as at December 31 are presented in the following table:
Class A Preference Shares
Series 1
Series 2
Series 3
Series 5
Series 6
Class A Preferred LP Units
Series 7
GP interest
2015
2014
5,449,675
4,510,389
9,961,399
7,000,000
7,000,000
10,000,000
-
10,000,000
7,000,000
7,000,000
33,921,463
34,000,000
7,000,000
7,000,000
-
-
2,651,506
2,651,506
Redeemable/Exchangeable partnership units
129,658,623
129,658,623
LP Units
Balance, beginning of year
Issuance of LP Units
Distribution reinvestment plan
Repurchase of LP Units for cancellation
Balance, end of year
Total LP Units on a fully-exchanged basis(1)
LP Units held by
Brookfield
External LP Unitholders
143,356,854
132,984,913
-
10,250,000
171,605
(340,289)
121,941
-
143,188,170
143,356,854
272,846,793
273,015,477
40,026,986
40,026,986
103,161,184
103,329,868
(1)
143,356,854
The fully-exchanged amounts assume the exchange of Redeemable/ Exchangeable partnership units for LP Units at the
beginning of the year.
143,188,170
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 40
DIVIDENDS AND DISTRIBUTIONS
The composition of the dividends and distributions for the year ended December 31 are
presented in the following table:
(MILLIONS)
Class A Preference Shares
Series 1
Series 2
Series 3
Series 5
Series 6
Declared or Accrued
Paid
2015
2014
2013
2015
2014
2013
$
6 $
12 $
13 $
7 $
12 $
2
8
7
7
-
10
8
8
-
11
8
5
2
8
7
7
-
11
8
8
13
-
12
6
4
$
30 $
38 $
37 $
31 $
39 $
35
Participating non-controlling
interests - in operating subsidiaries
$ 208 $ 149 $ 122 $ 208 $ 149 $ 122
General partnership interest in a
holding subsidiary held by Brookfield
Incentive distribution
$
$
4 $
8
12 $
4 $
2
6 $
4 $
-
4 $
8
4 $
12 $
4 $
2
6 $
4
-
4
Participating non-controlling interests - in a holding
subsidiary - Redeemable/Exchangeable
units held by Brookfield
$ 217 $ 201 $ 188 $ 216 $ 231 $ 185
Class A Preferred LP Units
Series 7
Limited partners' equity
Brookfield
External LP Unitholders
$
1 $
- $
- $
- $
- $
-
67
172
62
154
58
135
67
166
71
172
56
133
$ 239 $ 216 $ 193 $ 233 $ 243 $ 189
In January 2013, LP Unitholder distributions were increased to $1.45 per LP Unit on an
annualized basis, an increase of seven cents per LP Unit, which took effect with the distribution payable
in April 2013.
In February 2014, LP Unitholder distributions were increased to $1.55 per unit on an annualized
basis, an increase of ten cents per LP Unit, which took effect with the distribution payable in March 2014.
In February 2015, LP Unitholder distributions were increased to $1.66 per unit on an annualized
basis, an increase of eleven cents per LP Unit, which took effect with the distribution payable in March
2015.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 41
CRITICAL ESTIMATES AND CRITICAL JUDGMENTS
POLICIES
IN APPLYING ACCOUNTING
The consolidated annual financial statements are prepared in accordance with IFRS, which
require the use of estimates and judgments in reporting assets, liabilities, revenues, expenses and
contingencies. In the judgment of management, none of the estimates outlined in Note 2 – Significant
accounting policies in our audited consolidated financial statements are considered critical accounting
estimates as defined in NI 51-102 with the exception of the estimates related to the valuation of property,
plant and equipment and the related deferred income tax liabilities. These assumptions include estimates
of future electricity prices, discount rates, expected long-term average generation, inflation rates, terminal
year and operating and capital costs, the amount, the timing and the income tax rates of future income
tax provisions. Estimates also include determination of accruals, purchase price allocations, useful lives,
asset valuations, asset impairment testing, deferred tax liabilities, decommissioning retirement obligations
and those relevant to the defined benefit pension and non-pension benefit plans. Estimates are based on
historical experience, current trends and various other assumptions that are believed to be reasonable
under the circumstances.
In making estimates, management relies on external information and observable conditions
where possible, supplemented by internal analysis, as required. These estimates have been applied in a
manner consistent with that in the prior year and there are no known trends, commitments, events or
uncertainties that we believe will materially affect the methodology or assumptions utilized in this report.
These estimates are impacted by, among other things, future power prices, movements in interest rates,
foreign exchange and other factors, some of which are highly uncertain, as described in the “Risk
Factors” section. The interrelated nature of these factors prevents us from quantifying the overall impact
of these movements on Brookfield Renewable’s financial statements in a meaningful way. These sources
of estimation uncertainty relate in varying degrees to substantially all asset and liability account balances.
Actual results could differ from those estimates.
CRITICAL ESTIMATES
Brookfield Renewable makes estimates and assumptions that affect the carrying value of assets
and liabilities, disclosure of contingent assets and liabilities and the reported amount of income and other
comprehensive income (“OCI”) for the year. Actual results could differ from these estimates. The
estimates and assumptions that are critical to the determination of the amounts reported in the
consolidated financial statements relate to the following:
(i)
Property, plant and equipment
The fair value of Brookfield Renewable’s property, plant and equipment is calculated using
estimates and assumptions about future electricity prices from renewable sources, anticipated long-term
average generation, estimated operating and capital expenditures, future inflation rates and discount
rates, as described in Note 12 - Property, plant and equipment, at fair value in our audited consolidated
financial statements. Judgment is involved in determining the appropriate estimates and assumptions in
the valuation of Brookfield Renewable’s property, plant and equipment. See Note 2(o)(iii) - Critical
judgments in applying accounting policies – Property, plant and equipment in our audited consolidated
financial statements for further details.
Estimates of useful lives and residual values are used in determining depreciation. To ensure the
accuracy of useful lives and residual values, these estimates are reviewed on an annual basis.
(ii)
Financial instruments
Brookfield Renewable makes estimates and assumptions that affect the carrying value of its
financial instruments, including estimates and assumptions about future electricity prices, long-term
average generation, capacity prices, discount rates and the timing of energy delivery. Non-financial
instruments are valued using estimates of future electricity prices which are estimated by considering
broker quotes for the years in which there is a liquid market and for the subsequent years Brookfield
Renewable’s best estimate of electricity prices that would allow new entrants into the market. The fair
value of interest rate swaps is the estimated amount that another party would receive or pay to terminate
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 42
the swap agreements at the reporting date, taking into account current market interest rates. This
valuation technique approximates the net present value of future cash flows. See Note 9 - Risk
Management and Financial Instruments in our audited consolidated financial statements for more details.
(iii) Deferred income taxes
The consolidated financial statements include estimates and assumptions for determining the
future tax rates applicable to subsidiaries and identifying the temporary differences that relate to each
subsidiary. Deferred income tax assets and liabilities are measured at the tax rates that are expected to
apply during the year when the assets are realized or the liabilities settled, using the tax rates and laws
enacted or substantively enacted at the consolidated balance sheet dates. Operating plans and forecasts
are used to estimate when the temporary difference will reverse.
CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES
The following are the critical judgments that have been made in applying the accounting policies
used in the consolidated financial statements and that have the most significant effect on the amounts in
the consolidated financial statements:
(i)
Preparation of consolidated financial statements
These consolidated financial statements present the financial position, results of operations and
cash flows of Brookfield Renewable. Judgment is required in determining what assets, liabilities and
transactions are recognized in the consolidated financial statements as pertaining to Brookfield
Renewable’s operations.
(ii) Common control transactions
Common control business combinations specifically fall outside of scope of IFRS 3 and as such
management has used its judgment to determine an appropriate policy to account for these transactions.
Consideration was given to other relevant accounting guidance within the framework of principles in IFRS
and that reflects the economic reality of the transactions, in accordance with IAS 8, Accounting Policies,
Changes in Accounting Estimates and Errors (“IAS 8”). As a result, the consolidated financial statements
account for assets and liabilities acquired at the previous carrying value on the predecessor’s financial
statements. Differences between the consideration given and the assets and liabilities received are
recorded directly to equity.
(iii)
Property, plant and equipment
The accounting policy relating to Brookfield Renewable’s property, plant and equipment is
described in Note 2(f) - Property plant and equipment and revaluation method in our audited consolidated
financial statements. In applying this policy, judgment is used in determining whether certain costs are
additions to the carrying amount of the property, plant and equipment as opposed to repairs and
maintenance. If an asset has been developed, judgment is required to identify the point at which the asset
is capable of being used as intended and to identify the directly attributable costs to be included in the
carrying value of the development asset. The useful lives of property, plant and equipment are
determined by independent engineers periodically with an annual review by management.
Annually, Brookfield Renewable determines the fair value of its property, plant and equipment
using a methodology that it has judged to be reasonable. The methodology is generally a 20 year
discounted cash flow model. Twenty years is the period considered reasonable as Brookfield Renewable
has 20 year capital plans and it believes a reasonable third party would be indifferent between extending
the cash flows further in the model versus using a discounted terminal value.
The valuation model incorporates future cash flows from long-term power purchase agreements
that are in place where it is determined that the power purchase agreements are linked specifically to the
related power generating assets. With respect to estimated future generation that does not incorporate
long-term power purchase agreement pricing, the cash flow model uses estimates of future electricity
prices using broker quotes from independent sources for the years in which there is a liquid market. The
valuation of power generating assets not linked to long-term power purchase agreements also requires
the development of a long-term estimate of future electricity prices. In this regard the valuation model
uses a discount to the all-in cost of construction with a reasonable return, to secure energy from new
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 43
renewable on-shore wind development resources as the benchmark that will establish the market price
for electricity for renewable resources.
Brookfield Renewable’s long-term view is anchored to the cost of securing new energy from
renewable sources to meet future demand growth by the year 2023 in North America and Europe. This
year is viewed as the point when generators must build additional capacity to maintain system reliability
and provide an adequate level of reserve generation with the retirement of older coal fired plants, rising
environmental compliance costs, and increased demand. Brookfield Renewable has estimated a discount
to these new-build wind prices to determine renewable electricity prices for hydroelectric facilities. In
Brazil, the estimate of future electricity prices is based on a similar approach as applied in North America
using a forecast of the all-in cost of hydroelectric and wind development.
Discount rates are determined each year by considering the current interest rates, average
market cost of capital as well as the price risk and the geographical location of the operational facilities as
judged by management. Inflation rates are also determined by considering the current inflation rates and
the expectations of future rates by economists. Operating costs are based on long-term budgets
escalated for inflation. Each operational facility has a 20 year capital plan that it follows to ensure the
maximum life of its assets is achieved. Foreign exchange rates are forecasted by using the spot rates
and the available forward rates, extrapolated beyond the period available. The inputs described above to
the discounted cash flow model require management to consider facts, trends and plans in making its
judgments as to what derives a reasonable fair value of its property, plant and equipment.
(iv) Financial instruments
The accounting policy relating to Brookfield Renewable’s financial instruments is described in
Note 2(i) — Financial instruments in our audited consolidated financial statements. In applying the policy,
judgments are made in applying the criteria set out in IAS 39, Financial Instruments: Recognition and
Measurement (“IAS 39”), to record financial instruments at fair value through profit and loss, and the
assessments of the effectiveness of hedging relationships.
(v) Deferred income taxes
The accounting policy relating to Brookfield Renewable’s income taxes is described in Note 2(k)
— Income taxes in our audited consolidated financial statements. In applying this policy, judgments are
made in determining the probability of whether deductions, tax credits and tax losses can be utilized.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 44
FUTURE CHANGES IN ACCOUNTING POLICIES
(i)
Financial Instruments
In July 2014, the IASB issued the final version of IFRS 9, Financial Instruments (“IFRS 9”) which
reflects all phases of the financial instruments project and replaces IAS 39, Financial Instruments:
Recognition and Measurement and all previous versions of IFRS 9. The standard introduces new
requirements for classification and measurement, impairment, and hedge accounting. IFRS 9 is effective
for annual periods beginning on or after January 1, 2018, with early application permitted. Retrospective
application is required, but comparative information is not compulsory. Management is currently
evaluating the impact of IFRS 9 on the consolidated financial statements.
(ii) Amendments to IFRS 10 and IAS 28
The amendments to IFRS 10, Consolidated Financial Statements (“IFRS 10”) and IAS 28,
Investments in Associates and Joint Ventures (2011) (“IAS 28”) address an acknowledged inconsistency
between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of
assets between an investor and its associate or joint venture. The main consequence of the amendments
is that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a
subsidiary or not). A partial gain or loss is recognized when a transaction involves assets that do not
constitute a business, even if the assets are housed in a subsidiary. The amendments are effective for
transactions occurring in annual periods beginning on or after January 1, 2017 with earlier application
permitted. Management is currently evaluating the impact of the amendments to IFRS 10 and IAS 28 on
the consolidated financial statements.
(iii) Revenue recognition
IFRS 15, Revenue from Contracts with Customers (“IFRS 15”) was issued by IASB on May 28,
2014. IFRS 15 outlines a single comprehensive model to account for revenue arising from contracts with
customers and will replace the majority of existing IFRS requirements on revenue recognition including
IAS 18, Revenue, IAS 11, Construction Contracts and related interpretations. The core principle of the
standard is to recognize revenue to depict the transfer of goods and services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in exchange for those goods and
services. The standard has prescribed a five-step model to apply the principles. The standard also
specifies how to account for the incremental costs of obtaining a contract and the costs directly related to
fulfilling a contract. IFRS 15 is effective for annual periods beginning on or after January 1, 2018.
Management is currently evaluating the impact of IFRS 15 on the consolidated financial statements.
(iv)
Leases
IFRS 16, Leases (“IFRS 16”) was issued by the IASB on January 13, 2016. IFRS 16 brings most
leases on-balance sheet for lessees under a single model, eliminating the distinction between operating
and finance leases. Lessor accounting remains largely unchanged and the distinction between operating
and finance leases is retained. Under IFRS 16 a lessee recognizes a right-of-use asset and a lease
liability. The right-of-use asset is treated similarly to other non-financial assets and depreciated
accordingly, and the liability accrues interest. The lease liability is initially measured at the present value
of the lease payments payable over the lease term, discounted at the rate implicit in the lease. Lessees
are permitted to make an accounting policy election, by class of underlying asset, to apply a method like
IAS 17’s operating lease accounting and not recognize lease assets and lease liabilities for leases with a
lease term of 12 months or less, and on a lease-by-lease basis, to apply a method similar to current
operating lease accounting to leases for which the underlying asset is of low value. IFRS 16 supersedes
IAS 17, Leases and related interpretations and is effective for periods beginning on or after January 1,
2019, with earlier adoption permitted if IFRS 15 has also been applied. Management is currently
evaluating the impact of IFRS 16 on the consolidated financial statements.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 45
DISCLOSURE CONTROLS AND PROCEDURES AND
FINANCIAL REPORTING
INTERNAL CONTROL OVER
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer,
has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)), as of the end of
the period covered by this Annual Report. Based on such evaluation, our Chief Executive Officer and
Chief Financial Officer have concluded that as of December 31, 2015, our disclosure controls and
procedures are designed at a reasonable assurance level and are effective to provide reasonable
assurance that material information we are required to disclose in reports that we file or submit under the
Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the
rules and forms of the Securities and Exchange Commission, and that such information is accumulated
and communicated to our management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required disclosure. While disclosure controls and
procedures and internal controls over financial reporting were adequate and effective we continue to
implement certain measures to strengthen control processes and procedures.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Under the
supervision and with the participation of our management, including persons performing the functions of
principal executive and principal financial officers for us, we conducted an evaluation of the effectiveness
of our internal control over financial reporting as of December 31, 2015, based on the criteria set forth in
Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission. Based on evaluation under the Framework in Internal Control—Integrated
Framework, our management concluded that our internal control over financial reporting was effective as
of December 31, 2015.
Internal control systems, no matter how well designed, have inherent limitations. Therefore, even
those systems determined to be effective can provide only reasonable assurance with respect to financial
statement preparation and presentation. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
Report of Independent Registered Public Accounting Firm
The effectiveness of our internal control over financial reporting as of December 31, 2015 has
been audited by Ernst & Young LLP, Chartered Professional Accountants, Licensed Public Accountants,
who have also audited our consolidated financial statements, as stated in their reports which are included
herein.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures, management recognizes that
any controls and procedures, no matter how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives. In addition, the design of disclosure controls and
procedures must reflect the fact that there are resource constraints and that management is required to
apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Changes in Internal Control
There was no change in our internal control over financial reporting during the year ended
December 31, 2015, that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 46
OPERATIONAL AND FINANCIAL REVIEW FOR THE THREE MONTHS ENDED DECEMBER 31, 2015
The following table reflects the actual and long-term average generation for the three months
ended December 31:
GENERATION (GWh)
Hydroelectric
North America
United States
Canada
Latin America
Wind
North America
United States
Canada
Latin America
Europe
Actual Generation(1)
2014
2015
LTA Generation(1)
Actual vs. LTA
Prior Year
2015
2014
2015
2014
Variance of Results
Actual vs.
2,546
1,018
3,564
1,240
4,804
190
345
535
137
479
1,151
2,434
1,714
4,148
795
4,943
230
311
541
-
299
840
2,801
1,202
4,003
1,048
5,051
219
343
562
148
443
1,153
2,796
1,218
4,014
900
4,914
274
343
617
-
235
852
(255)
(184)
(439)
192
(247)
(29)
2
(27)
(11)
36
(2)
(362)
496
134
(105)
29
(44)
(32)
(76)
-
64
(12)
112
(696)
(584)
445
(139)
(40)
34
(6)
137
180
311
Other
Total(2)
278
(1) For assets acquired or reaching commercial operation during the year, this figure is calculated from the acquisition or
6,369
5,839
6,117
5,770
(252)
106
162
165
56
52
69
(3)
4
commercial operation date, and is not annualized.
Includes 100% of generation from equity-accounted investments.
(2)
Generation for the three months ended December 31, 2015 totaled 6,117 GWh, below the long-
term average of 6,369 GWh and an increase of 278 GWh compared to the prior year.
The hydroelectric portfolio generated 4,804 GWh, below the long-term average of 5,051 GWh and
a decrease of 139 GWh compared to the prior year. Generation in the United States was higher
compared to the prior year, particularly in Tennessee and North Carolina, but was below the long-term
average across the balance of the portfolio. In Canada, generation was below the long-term average and
lower compared to the prior year, in which Ontario in particular had experienced strong inflows. While we
experienced lower generation in North America relative to the long-term average and prior year, inflows
showed strong signs of improvement during the fourth quarter of 2015 and were used to replenish
reservoirs. As at December 31, 2015, reservoir levels were in line with the long-term average and position
us well for 2016. Generation in Brazil continued to improve in the fourth quarter of 2015 but remained
below the long-term average. In this period we reached an agreement with the Brazilian government to
recover revenues equivalent to generation of 278 GWh as compensation for system-wide curtailments in
2015.
Our Irish wind portfolio generated above the long-term average, and marginally below the prior
year. Generation from our North American wind portfolio generated in line with the long-term average and
increased 44 GWh from the prior year due to improved wind conditions. Generation from the prior year
includes 50 GWh related to the 102 MW wind facility in California sold in 2015.
Our recently acquired 433 MW hydroelectric, wind and biomass portfolio in Brazil and 123 MW
wind portfolio in Portugal contributed 471 GWh and 74 GWh, respectively. Contributions from Irish wind
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 47
assets commissioned during 2015 were 115 GWh which brought the total contribution from the growth in
the portfolio to 660 GWh. This was below the long-term average.
The following table reflects Adjusted EBITDA, Funds From Operations, Adjusted Funds From
Operations, and provides a reconciliation to net (loss) income for the three months ended December 31:
(MILLIONS, EXCEPT AS NOTED)
Revenues
Other income
Share of cash earnings from equity-accounted investments
Direct operating costs
Adjusted EBITDA(1)
Interest expense – borrowings
Management service costs
Current income taxes
Less: cash portion of non-controlling interests
Participating non-controlling interests - in operating subsidiaries
Preferred equity
Less: distributions to preferred limited partners
Funds From Operations(1)
Less: adjusted sustaining capital expenditures(2)
Adjusted Funds From Operations(1)
Add: cash portion of non-controlling interests
Add: distributions to preferred limited partners
Add: adjusted sustaining capital expenditures
Other items:
Depreciation
Unrealized financial instruments gain
Share of non-cash loss from equity-accounted investments
Deferred income tax recovery
Other
Net (loss) income
Net (loss) income attributable to limited partners' equity
Basic and diluted (loss) earnings per LP Unit(3)
(1) Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures”.
(2) Based on long-term sustaining capital expenditure plans.
(3) Average LP Units outstanding during the period totaled 143.2 million (2014: 143.3 million).
2015
392 $
6
2
(142)
258
(103)
(10)
(1)
(48)
(7)
(1)
88
(15)
73
55
1
15
(144)
-
(2)
40
(48)
(10)
(13)
(0.09)
$
$
$
$
$
$
$
2014
408
2
1
(138)
273
(106)
(13)
1
(30)
(9)
-
116
(15)
101
39
-
15
(148)
5
(8)
21
6
31
16
0.11
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 48
Revenues totaling $392 million represent a decrease of $16 million.
Revenues from our entire hydroelectric portfolio decreased $11 million. In North America, lower
generation at our Canadian portfolio and a relatively lower pricing environment in the northeastern United
States contributed to a decrease in revenues. Revenues from our Brazilian hydroelectric portfolio
included the recovery relating to curtailment of $25 million, and relatively stronger power prices that we
were able to capture by maintaining a lower level of contracted power in the portfolio.
Improved conditions across our North American and Irish wind portfolios, and escalations in our
power purchase agreements resulted in an $11 million increase in revenues.
The recent growth across our entire portfolio contributed revenues of $36 million. The 102 MW
wind facility in California sold at the beginning of the third quarter of 2015 had contributed revenues of $5
million in the prior year.
The appreciation of the U.S. dollar resulted in a $46 million reduction in revenues. This also
affected operating and borrowing costs, and the net impact on Funds From Operations was $19 million.
The average total revenue per MWh of $64 decreased $6 per MWh, primarily attributable to the
appreciation of the U.S. dollar impacting our revenues denominated in Canadian dollars, Euros and the
Brazilian Real, partially offset by higher relative pricing at certain facilities in our portfolio.
Direct operating costs totaling $142 million represent an increase of $4 million, primarily reflecting
timing differences from the prior year largely related to our ongoing maintenance projects and the growth
in our portfolio.
Interest expense totaling $103 million represents a decrease of $3 million, as incremental
borrowing costs of $9 million attributable to the growth in our portfolio were partly offset by savings
attributable to repayments on certain subsidiary borrowings.
Management service costs totaling $10 million represent a decrease of $3 million, which was
primarily attributable to the appreciation of the U.S. dollar.
The cash portion of non-controlling interests totaling $55 million represent an increase of $16
million which was primarily attributable to the growth in our portfolio and improved performance from
certain assets in our portfolio.
Funds From Operations totaling $88 million represent a decrease of $28 million, reflecting the
variances described above. The growth in our portfolio contributed $10 million to Funds From Operations.
Net loss totaling $10 million represents a decrease of $41 million.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 49
SUMMARY OF HISTORICAL QUARTERLY RESULTS ON A CONSOLIDATED BASIS
The following is a summary of unaudited quarterly financial information for the last twelve consecutive quarters:
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) - LTA(1)(2)
Generation (GWh) - actual(1)(2)
Revenues
Adjusted EBITDA(3)
Funds From Operations(3)
Net (loss) income
Non-controlling interests
Participating non-controlling
interests - in operating subsidiaries
General partnership interest in a
holding subsidiary held by Brookfield
Participating non-controlling
interests - in a holding subsidiary
- Redeemable/Exchangeable units
held by Brookfield
Preferred equity
Preferred limited partners' equity
Limited partners' equity
Basic and diluted (loss) earnings per LP Unit
Average LP Units outstanding (millions)
Distributions:
General partnership interest in a
holding subsidiary held by Brookfield
Participating non-controlling interests - in a holding
subsidiary - Redeemable/Exchangeable units
held by Brookfield
Preferred equity
Preferred limited partners' equity
Limited partners' equity
(1)
(2)
(3)
2015
Q3
2014
2013
Q4
Q2
Q4
Q1
Q1
6,369 5,459 7,199 6,516 5,770 5,065 6,440 6,021 5,380 4,960 6,171 5,325
6,117 4,992 6,400 5,823 5,839 4,383 6,341 5,985 5,268 5,154 6,265 5,535
$ 392 $ 337 $ 458 $ 441 $ 408 $ 342 $ 474 $ 480 $ 393 $ 392 $ 484 $ 437
319
162
338
153
360
185
272
137
273
116
258
88
360
198
357
187
339
146
260
108
223
61
242
80
Q1
Q2
Q4
Q2
Q3
Q3
8
37
10
14
(8)
(2)
21
40
(7)
8
24
16
-
-
-
-
-
-
-
1
-
-
-
1
(13)
7
1
(13)
(10)
(0.09)
30
7
-
31
85
0.23
143.3 143.4 143.4 143.4 143.3 143.3 135.3 133.0 132.9 132.9 132.9 132.9
(16)
10
-
(17)
(25)
(0.13)
(8)
7
-
(9)
27
(0.07)
14
8
-
15
51
0.10
37
9
-
38
125
0.29
8
8
-
9
35
0.07
14
9
-
16
31
0.11
10
10
-
11
24
0.08
22
10
-
22
78
0.17
20
10
-
21
72
0.15
5
10
-
5
28
0.04
3
3
3
3
1
2
1
2
1
1
1
1
54
7
1
59
54
7
-
59
54
8
-
60
55
8
-
61
50
9
-
56
50
10
-
56
51
10
-
53
50
9
-
51
47
10
-
48
47
10
-
49
47
10
-
48
47
7
-
48
Includes 100% of generation from equity-accounted investments.
For assets acquired or reaching commercial operation during the year, this figure is calculated from the acquisition or commercial operation date and is not annualized.
Non-IFRS measures. See "Cautionary Statement Regarding Use of Non-IFRS Measures" , “Financial Review by Segments for the Year Ended December 31, 2015” and “Financial Review
by Segments for the Year Ended December 31, 2014”.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 50
RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
(a) Market risk
Market risk is defined for these purposes as the risk that the fair value or future cash flows of a
financial instrument held by Brookfield Renewable will fluctuate because of changes in market prices.
Brookfield Renewable faces market risk from foreign currency assets and liabilities, the impact of
changes in interest rates, and floating rate liabilities. Market risk is managed by funding assets with
financial liabilities in the same currency and with similar interest rate characteristics and holding financial
contracts, such as interest rate swaps and foreign exchange contracts, to minimize residual exposures.
Financial instruments held by Brookfield Renewable that are subject to market risk include borrowings
and financial instruments, such as interest rate, currency and commodity contracts. The categories of
financial instruments that can give rise to significant variability are described below:
(i) Electricity price risk
Electricity price risk is defined for these purposes as the risk that the fair value or future cash
flows of a financial instrument held by Brookfield Renewable will fluctuate because of changes in
electricity prices. Electricity price risk arises from the sale of Brookfield Renewable’s uncontracted
generation. Brookfield Renewable aims to sell electricity under long-term contracts to secure stable prices
and mitigate its exposure to wholesale markets.
The table below summarizes the impact of changes in the market price of electricity as at
December 31. The impact is expressed in terms of the effect on net income and OCI. The sensitivities
are based on the assumption that the market price changes by five percent with all other variables held
constant.
Impact of a 5% change in the market price of electricity, on outstanding energy derivative
contracts, for the year ended December 31:
(MILLIONS)
5% increase
5% decrease
(ii) Foreign currency risk
Effect on net income
Effect on OCI
2015
2014
2013
2015
2014
2013
$
(2) $
(1) $
(1) $
(7) $
(9) $
2
1
1
7
9
1
(1)
Foreign currency risk is defined for these purposes as the risk that the fair value of a financial
instrument held by Brookfield Renewable will fluctuate because of changes in foreign currency rates.
Brookfield Renewable has exposure to the Canadian dollar, Brazil real and Euro through its
investments in foreign operations. Consequently, fluctuations in the U.S. dollar exchange rate against
these currencies increase the volatility of net income and other comprehensive income. Brookfield
Renewable holds foreign currency contracts primarily to mitigate this exposure.
The table below summarizes the impact of changes in the exchange rate as at December 31. The
impact is expressed in terms of the effect on income and OCI. The sensitivities are based on the
assumption that the currency exchange rate changes by five percent with all other variables held
constant.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 51
Impact of a 5% change in U.S. dollar exchange rates, on outstanding foreign exchange swaps, for
the year ended December 31:
(MILLIONS)
5% increase
5% decrease
(iii) Interest rate risk
Effect on net income
Effect on OCI
2015
2014
2013
2015
2014
2013
$
2 $
12 $
- $
10 $
19 $
(2)
(12)
-
(10)
(19)
-
-
Interest rate risk is defined for these purposes as the risk that the fair value or future cash flows of
a financial instrument held by Brookfield Renewable will fluctuate, because of changes in interest rates.
Brookfield Renewable’s assets largely consist of long duration physical assets. Brookfield
Renewable’s financial liabilities consist primarily of long-term fixed rate debt or floating-rate debt that has
been swapped to fixed rates with interest rate financial instruments. All non-derivative financial liabilities
are recorded at their amortized cost. Brookfield Renewable also holds interest rate contracts to lock-in
fixed rates on certain anticipated future debt issuances.
Brookfield Renewable will enter into interest rate swaps designed to minimize the exposure to
interest rate fluctuations on its variable rate debt. Fluctuations in interest rates could impact Brookfield
Renewable’s cash flows, primarily with respect to the interest payable against Brookfield Renewable’s
variable rate debt, which is limited to certain subsidiary borrowings with a total principal value of $2,532
million (2014: $2,552 million). Of this principal value, $1,040 million (2014: $1,237 million) has been
hedged through the use of interest rate swaps.
The table below summarizes the impact of changes in the interest rate as at December 31. The
impact is expressed in terms of the effect on income and OCI. The sensitivities are based on the
assumption that the interest rate changes by one percent with all other variables held constant.
Impact of a 1% change in interest rates, on outstanding interest rate swaps and variable rate
debt, for the year ended December 31:
(MILLIONS)
1% increase
1% decrease
(b) Credit risk
Effect on net income
Effect on OCI
2015
2014
2013
2015
2014
$
(15) $
(13) $
(7) $
125 $
138 $
15
13
7
(125)
(138)
2013
96
(96)
Credit risk is the risk of loss due to the failure of a borrower or counterparty to fulfill its contractual
obligations. Brookfield Renewable’s exposure to credit risk in respect of financial instruments relates
primarily to counterparty obligations regarding energy contracts, interest rate swaps, forward foreign
exchange contracts and physical electricity and gas transactions.
Brookfield Renewable minimizes credit risk with counterparties through the selection, monitoring
and diversification of counterparties, and the use of standard trading contracts, and other credit risk
mitigation techniques. In addition, Brookfield Renewable’s power purchase agreements are reviewed
regularly and are almost exclusively with customers having long standing credit histories or investment
grade ratings, which limit the risk of non-collection. As at December 31, 2015, 99% (2014: 99%) of
Brookfield Renewable’s trade receivables of $98 million were current. See Note 8 - Trade receivables and
other current assets in our audited consolidated financial statements for additional details regarding
Brookfield Renewable’s trade receivables balance.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 52
The maximum credit exposure at December 31 was as follows:
(MILLIONS)
Cash and cash equivalents
Restricted cash(1)
Trade receivables and other short-term receivables
Financial instrument assets
Due from related parties
(1)
Includes both the current and long-term amounts.
(c) Liquidity risk
$
2015
63
336
185
32
57
$
2014
150
313
131
66
63
$
673
$
723
Liquidity risk is the risk that we cannot meet a demand for cash or fund an obligation when due.
Liquidity risk is mitigated by cash and cash equivalent balances and its access to undrawn credit facilities.
Details of the available portion of credit facilities are included in “Liquidity and Capital Resources”. We
also ensure that we have access to public capital markets and maintain a strong investment grade credit
rating of BBB (high).
We are also subject to the risk associated with debt financing. This risk is mitigated by the long-
term duration of debt instruments and the diversification in maturity dates over an extended period of
time.
The sensitivity analysis discussed above reflects only the risks associated with instruments that
we consider are market sensitive and the potential loss resulting from one or more selected hypothetical
changes. Therefore, the discussion above is not intended to reflect fully the risk exposure that we may
have.
RISK FACTORS
The following represents the most relevant risk factors relating to Brookfield Renewable’s
business, and is not all-inclusive. For a description of other possible risks such as: uncontracted
generation in our portfolio, general industry risks, force majeure, insurance limits, litigation, community
and stakeholder relations, newly developed technologies, labor relations, the supply of feedstock for our
biomass cogeneration facilities, greenfield development growth, sourcing and financing of acquisition
opportunities, operational arrangements with partially owned investments, the issuance of equity or debt
for future acquisitions and developments, new markets in foreign countries, general role, relationship and
operational issues with Brookfield Asset Management, and general risks related to our limited partnership
units, general taxation issues – domestic and foreign, please see the Form 20-F and other public
disclosures which can be accessed at EDGAR and SEDAR.
Management believes that, since the end of 2015 there have been no changes in the business
environment and risks that could affect Brookfield Renewable’s activities or results, other than risks
related to the volatility of supply and demand in the energy markets.
RISKS RELATED TO BROOKFIELD RENEWABLE
We may be subject to the risks commonly associated with a separation of economic interest from
control or the incurrence of debt at multiple levels within an organizational structure.
Our ownership and organizational structure is similar to structures whereby one company controls
another company which in turn holds controlling interests in other companies; thereby, the company at
the top of the chain may control the company at the bottom of the chain even if its effective equity position
in the bottom company is less than a controlling interest. Brookfield is the sole shareholder of the
managing general partner and, as a result of such ownership of the managing general partner, Brookfield
will be able to control the appointment and removal of the managing general partner’s directors and,
accordingly, will exercise substantial influence over us. In turn, we often have a majority controlling
interest or a significant influence in our investments. Even though Brookfield has an effective economic
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 53
interest in our business of approximately 62% as a result of its ownership of our LP Units and the
Redeemable/Exchangeable partnership units, over time Brookfield may reduce this economic interest
while still maintaining its controlling interest. This could lead to Brookfield using its control rights in a
manner that conflicts with the economic interests of our other Unitholders. For example, despite the fact
that we have the Conflicts Policy in place, which addresses the requirement for independent approval and
other requirements for transactions in which there is greater potential for a conflict of interest to arise,
including transactions with affiliates of Brookfield, because Brookfield will be able to exert substantial
influence over us, and, in turn, over our investments, there is a greater risk of transfer of assets of our
investments at non-arm’s length values to Brookfield and its affiliates. In addition, debt incurred at multiple
levels within the chain of control could exacerbate the separation of economic interest from controlling
interest at such levels, thereby creating an incentive to leverage us and our investments. Any such
increase in debt would also make us more sensitive to declines in revenues, increases in expenses and
interest rates, and adverse market conditions. The servicing of any such debt would also reduce the
amount of funds available to pay distributions to us and ultimately to our Unitholders.
Our failure to maintain effective internal controls could have a material adverse effect on our
business in the future and the price of our Units.
Pursuant to Section 404 of the Sarbanes-Oxley Act, our management has delivered a report that
assesses the effectiveness of our internal controls over financial reporting (in which they concluded that
these internal controls are effective) and our independent registered public accounting firm has delivered
an attestation report on our management’s assessment of, and the operating effectiveness of, our internal
controls over financial reporting in conjunction with their opinion on our audited consolidated financial
statements. Any failure to maintain adequate internal controls over financial reporting or to implement
required, new or improved controls, or difficulties encountered in their implementation, could cause us to
report material weaknesses in our internal controls over financial reporting and could result in a more than
remote possibility of errors or misstatements in our consolidated financial statements that would be
material. If we or our independent registered public accounting firm were to conclude that our internal
controls over financial reporting were not effective, investors could lose confidence in our reported
financial information and the price of our Units could decline. Our failure to achieve and maintain effective
internal controls could have a material adverse effect on our business in the future, our access to the
capital markets and investors’ perception of us. In addition, material weaknesses in our internal controls
could require significant expense and management time to remediate.
RISKS RELATED TO OUR OPERATIONS AND THE RENEWABLE POWER INDUSTRY
Changes to hydrology at our hydroelectric stations, wind conditions at our wind facilities or to
crop supply or weather conditions generally at our biomass cogeneration facilities could
materially adversely affect the volume of electricity generated.
The revenues generated by our facilities are proportional to the amount of electricity generated
which in turn is dependent upon available water flows, wind conditions and weather conditions generally.
Hydrology, wind and weather conditions have natural variations from season to season and from year to
year and may also change permanently because of climate change or other factors. A natural disaster
could also impact water flows within the watersheds in which we operate. Wind energy is highly
dependent on weather conditions and, in particular, on wind conditions. The profitability of a wind facility
depends not only on observed wind conditions at the site, which are inherently variable, but also on
whether observed wind conditions are consistent with assumptions made during the project development
phase. A sustained decline in water flow at our hydroelectric stations or in wind conditions at our wind
facilities could lead to a material adverse change in the volume of electricity generated, revenues and
cash flow. Weather conditions have historically caused variability in sugarcane harvests. A decline in
sugarcane supply caused by drought, frost or floods, to the sugar and ethanol mills that are the feedstock
suppliers of our biomass cogenerations facilities, could limit the volume of energy these facilities are able
to generate.
In Brazil, hydroelectric power generators have access to a hydrology balancing program (“MRE”),
which, within the limitation referred to below, stabilizes hydrology by assuring that all participant plants in
the MRE receive a reference amount of electricity, approximating long-term average irrespective of the
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 54
actual volume of energy generated whether above or below long-term average and substantially all our
assets are part of that pool. In cases of nationwide drought, when the pool as a whole is in shortfall
relative to the long-term average, an asset can expect to share the nationwide shortfall pro-rata with the
rest of the pool. In addition, specific rules provide the minimum percentages of the reference amount of
electricity that must be actually generated each year for assuring participation in the MRE. The energy
reference amount is assessed yearly according to the criteria of such regulation, and can be adjusted
positively or negatively. If the Brookfield Renewable reference amount is revised, our share of the
balancing pool could be reduced. If the MRE is terminated or changed, Brookfield Renewable’s financial
results would be more exposed to variations in hydrology at certain hydroelectric facilities in Brazil. In
both instances, this could have an adverse effect on our results of operations and cash flows.
Counterparties to our contracts may not fulfill their obligations and, as our contracts expire, we
may not be able to replace them with agreements on similar terms.
If, for any reason, any of the purchasers of power under our power purchase agreements,
including Brookfield, are unable or unwilling to fulfill their contractual obligations under the relevant power
purchase agreement or if they refuse to accept delivery of power pursuant to the relevant power purchase
agreement, our assets, liabilities, business, financial condition, results of operations and cash flow could
be materially and adversely affected as we may not be able to replace the agreement with an agreement
on equivalent terms and conditions. External events, such as a severe economic downturn, could impair
the ability of some counterparties to the power purchase agreements or some end use customers to pay
for electricity received.
Certain power purchase agreements in our portfolio will be subject to re-contracting in the future.
We cannot provide any assurance that we will be able to re-negotiate these contracts once their terms
expire, and even if we are able to do so, we cannot provide any assurance that we will be able to obtain
the same prices or terms we currently receive. If we are unable to renegotiate or replace these contracts,
or unable to secure prices at least equal to the current prices we receive, our business, financial
condition, results of operation and prospects could be adversely affected.
Conversely, a significant percentage of our sales will be made by facilities subject to indefinite
term contracts with Brookfield (taking into account its rights of renewal) at fixed prices per MWh.
Accordingly, with respect to those facilities, our ability to realize improved revenues due to increases in
market prices for renewable power may be limited.
A significant portion of the power we generate is sold under long-term power purchase
agreements with Brookfield, public utilities or industrial or commercial end-users, some of whom may not
be rated by any rating agency. For example, as at December 31, 2015, approximately 42% of our 2016
contracted generation was with Brookfield entities, the majority of which are not rated and whose
obligations are not guaranteed by Brookfield Asset Management.
Increases in water rental costs (or similar fees) or changes to the regulation of water supply may
impose additional obligations on Brookfield Renewable.
Water rights are generally owned or controlled by governments that reserve the right to control
water levels or impose water-use requirements as a condition of license renewal that differ from those
arrangements in place today. We are required to pay taxes, make rental payments or pay similar fees for
use of water and related rights once our hydroelectric projects are in commercial operation. Significant
increases in water rental costs or similar fees in the future or changes in the way that governments
regulate water supply could have a material adverse effect on our assets, liabilities, business, financial
condition, results of operations and cash flow.
Supply and demand in the energy market, including the non-renewable energy market, is volatile
and such volatility could have an adverse impact on electricity prices and a material adverse
effect on Brookfield Renewable’s assets, liabilities, business, financial condition, results of
operations and cash flow.
A portion of Brookfield Renewable’s revenues are tied, either directly or indirectly, to the
wholesale market price for electricity in the markets in which Brookfield Renewable operates. Wholesale
market electricity prices are impacted by a number of factors including: the price of fuel (for example,
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 55
natural gas) that is used to generate electricity; the management of generation and the amount of excess
generating capacity relative to load in a particular market; the cost of controlling emissions of pollution,
including potentially the cost of carbon; the structure of the electricity market; and weather conditions that
impact electrical load. More generally, there is uncertainty surrounding the trend in electricity demand
growth, which is greatly influenced by: macroeconomic conditions, absolute and relative energy prices
and energy conservation and demand-side management. Correspondingly, from a supply perspective,
there are uncertainties associated with the timing of generating plant retirements – in part driven by
environmental regulations – and with the scale, pace and structure of replacement capacity, again
reflecting a complex interaction of economic and political pressures and environmental preferences. For
example, declines in natural gas prices have impacted prices in power markets in North America. This
volatility and uncertainty in the power market generally, including the non-renewable power market, could
have a material adverse effect on Brookfield Renewable’s assets, liabilities, business, financial condition,
results of operations and cash flow.
Our operations are highly regulated and may be exposed to increased regulation which could
result in additional costs to Brookfield Renewable.
Our generation assets are subject to extensive regulation by various government agencies and
regulatory bodies in different countries at the federal, regional, state, provincial and local level. As legal
requirements frequently change and are subject to interpretation and discretion, we may be unable to
predict the ultimate cost of compliance with these requirements or their effect on our operations. Any new
law, rule or regulation could require additional expenditure to achieve or maintain compliance or could
adversely impact our ability to generate and deliver energy. Also, operations that are not currently
regulated may become subject to regulation which could result in additional cost to our business. Further,
changes in wholesale market structures or rules, such as generation curtailment requirements or
limitations to access the power grid, could have a material adverse effect on our ability to generate
revenues from our facilities. For example, in North America, many of our assets are subject to the
operating and market-setting rules determined by independent system operators, such as the ISO New
England. These independent system operators could introduce rules in a way that adversely impact our
operations.
There is a risk that our concessions and licenses will not be renewed.
We hold concessions and licenses and we have rights to operate our facilities which generally
include rights to the land and water required for power generation. We generally expect that our rights
and/or our licenses will be renewed. However, if we are not granted renewal rights, or if our concessions
and licenses, as the case may be, are renewed subject to conditions which impose additional costs, or
impose additional restrictions such as setting a price ceiling for energy sales, our profitability and
operational activity could be adversely impacted.
The cost of operating our plants could increase for reasons beyond our control.
While we currently maintain an appropriate and competitive cost position, there is a risk that
increases in our cost structure that are beyond our control could materially adversely impact our financial
performance. Examples of such costs include compliance with new conditions imposed during the
relicensing process, municipal property taxes, water rental fees and the cost of procuring materials and
services required for our maintenance activities.
We may fail to comply with the conditions in, or may not be able to maintain, our governmental
permits.
Our generation assets and construction projects are required to comply with numerous
supranational (in the case of the European Union), federal, regional, state, provincial and local statutory
and regulatory standards and to maintain numerous licenses, permits and governmental approvals
required for operation. Some of the licenses, permits and governmental approvals that have been issued
to our operations contain conditions and restrictions, or may have limited terms. If we fail to satisfy the
conditions or comply with the restrictions imposed by our licenses, permits and governmental approvals,
or the restrictions imposed by any statutory or regulatory requirements, we may become subject to
regulatory enforcement action and the operation of the assets could be adversely affected or be subject
to fines, penalties or additional costs or revocation of regulatory approvals, permits or licenses. In
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 56
addition, we may not be able to renew, maintain or obtain all necessary licenses, permits and
governmental approvals required for the continued operation or further development of our projects, as a
result of which the operation or development of our assets may be limited or suspended. Our failure to
renew, maintain or obtain all necessary licenses, permits or governmental approvals may have a material
adverse effect on our assets, liabilities, business, financial condition, results of operations and cash flow.
We may experience equipment failure.
Our generation assets may not continue to perform as they have in the past and there is a risk of
equipment failure due to wear and tear, latent defect, design error, operator error or early obsolescence,
among other things, which could have a material adverse effect on our assets, liabilities, business,
financial condition, results of operations and cash flow. In particular, wind generation turbines are less
commercially proven than hydroelectric assets and have shorter lifespans.
The occurrence of dam failures could result in a loss of generating capacity and repairing such
failures could require us to expend significant amounts of capital and other resources.
The occurrence of dam failures at any of our hydroelectric generating stations or the occurrence
of dam failures at other generating stations or dams operated by third parties whether upstream or
downstream of our hydroelectric generating stations could result in a loss of generating capacity and
repairing such failures could require us to expend significant amounts of capital and other resources.
Such failures could result in damage to the environment or damages and harm to third parties or the
public, which could expose us to significant liability.
We are subject to foreign currency risk which may adversely affect the performance of
our operations and our ability to manage such risk depends, in part, on our ability to implement
an effective hedging strategy.
A significant portion of our current operations are in countries where the U.S. dollar is not the
functional currency. These operations pay distributions in currencies other than the U.S. dollar, which we
must convert to U.S. dollars prior to making distributions. A significant depreciation in the value of such
foreign currencies or measures which may be introduced by foreign governments to control inflation or
deflation may have a material adverse effect on our business, financial condition, results of operations
and cash flows. When managing our exposure to currency risks, we use foreign currency forward
contracts and other strategies to mitigate currency risk and there can be no assurances that these
strategies will be successful.
The ability to deliver electricity to our various counterparties requires the availability of and
access to interconnection facilities and transmission systems.
Our ability to sell electricity is impacted by the availability of, and access to, the various
transmission systems to deliver power to its contractual delivery point and the arrangements and facilities
for interconnecting the generation projects to the transmission systems. The absence of this availability
and access, our inability to obtain reasonable terms and conditions for interconnection and transmission
agreements, the operational failure of existing interconnection facilities or transmission facilities, the lack
of adequate capacity on such interconnection or transmission facilities, may have a material adverse
effect on our ability to deliver electricity to our various counterparties or the requirement of counterparties
to accept and pay for energy delivery, which could materially and adversely affect our assets, liabilities,
business, financial condition, results of operations and cash flow.
Our operations are exposed to health, safety, security and environmental risks.
The ownership, construction and operation of our generation assets carry an inherent risk of
liability related to public safety, health, safety, security and the environment, including the risk of
government imposed orders to remedy unsafe conditions and/or to remediate or otherwise address
environmental contamination or damage. We could also be exposed to potential penalties for
contravention of health, safety, security and environmental laws and potential civil liability. In the ordinary
course of business we incur capital and operating expenditures to comply with health, safety, security and
environmental laws to obtain and comply with licenses, permits and other approvals and to assess and
manage related risks. The cost of compliance with these laws (and any future laws or amendments
enacted) may increase over time and result in additional material expenditures. We may become subject
to government orders, investigations, inquiries or other proceedings (including civil claims) relating to
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 57
health, safety, security and environmental matters as a result of which our operations may be limited or
suspended. The occurrence of any of these events or any changes, additions to or more rigorous
enforcement of health, safety, security and environmental laws could have a material and adverse impact
on operations and result in additional material expenditures. Additional environmental, health and safety
issues relating to presently known or unknown matters may require unanticipated expenditures, or result
in fines, penalties or other consequences (including changes to operations) that may be material and
adverse to our business and results of operations.
We may suffer a significant loss resulting from fraud, bribery, corruption other illegal acts,
inadequate or failed internal processes or systems, or from external events.
We may suffer a significant loss resulting from fraud, bribery, corruption, other illegal acts,
inadequate or failed internal processes or systems, or from external events, such as security threats
affecting our ability to operate. We operate in different markets and rely on our employees and certain
third parties to follow our policies and processes as well as applicable laws in their activities. Risk of
illegal acts or failed systems is managed through our infrastructure, controls, systems and people,
complemented by central groups focusing on enterprise-wide management of specific operational risks
such as fraud, trading, outsourcing, and business disruption, as well as personnel and systems risks.
Specific programs, policies, standards, methodologies and training have been developed to support the
management of these risks and, as we expand into new markets and make new investments, we update
and implement our programs, policies, standards, methodologies and training to address the risks that we
perceive. The failure to adequately identify or manage these risks could result in direct or indirect financial
loss, regulatory censure and/or harm to the reputation of Brookfield Renewable.
We rely on computerized business systems.
Our business places significant reliance on information technology. In addition, our business also
relies upon telecommunication services to remotely monitor and control our assets and interface with
regulatory agencies, wholesale power markets and customers. The information and embedded systems
of key business partners and regulatory agencies are also important to our operations. In light of this, we
may be subject to cybersecurity risks or other breaches of information technology security. A breach of
our cyber/data security measures or the failure or malfunction of any of our computerized business
systems, associated backup or data storage systems for a significant time period could have a material
adverse effect on our business operations, financial reporting, financial condition and results of
operations.
Advances in technology could impair or eliminate the competitive advantage of our projects.
There are other alternative technologies that can produce renewable power, such as fuel cells,
micro-turbines and photovoltaic (solar) cells. Most of these alternative technologies still require subsidies
to be competitive with conventional generation sources (including hydroelectric); however, research and
development activities are ongoing to seek improvements in such alternative technologies and their cost
of producing electricity is gradually declining. Additionally, research and developments activities are
ongoing to seek improvements and reductions in carbon emissions from conventional fossil fuel
generation. It is possible that advances will further reduce the cost of alternative methods of power
generation. If this were to happen, the competitive advantage of our projects may be significantly
impaired or eliminated and our assets, liabilities, business, financial condition, results of operations and
cash flow could be materially and adversely affected as a result.
RISKS RELATED TO FINANCING
Our ability to finance our operations is subject to various risks relating to the state of the capital
markets.
Future acquisitions, the development and construction of new facilities and other capital
expenditures will be financed out of cash generated from our operations, capital recycling, debt and
possible future sales of equity. There is debt throughout our corporate structure that will need to be
replaced from time to time: Brookfield Renewable, BRELP, and the holding entities have corporate debt
and many operating entities have limited recourse project level debt (the majority of which is non-
recourse to Brookfield Renewable). Our ability to obtain debt or equity financing or to fund our growth,
and our ability to refinance existing indebtedness, is dependent on, among other factors, the overall state
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 58
of the capital markets, continued operating performance of our assets, future electricity market prices, the
level of future interest rates, lenders’ and investors’ assessment of our credit risk, capital markets
conditions and investor appetite for investments in renewable energy and infrastructure assets in general
and in Brookfield Renewable’s securities in particular. Also, Brookfield Renewable’s financing agreements
contain conditions that limit our ability to repay indebtedness prior to maturity without incurring penalties,
which may limit our ability to raise capital and financing on favourable terms. To the extent that external
sources of capital become limited or unavailable or available on onerous terms, our ability to fund
acquisitions and make necessary capital investments to construct new or maintain existing facilities will
be impaired, and as a result, our business, financial condition, results of operations and prospects may be
materially and adversely affected.
We are subject to operating and financial restrictions through covenants in our loan, debt and
security agreements.
Brookfield Renewable is subject to operating and financial restrictions through covenants in our
loan, debt and security agreements. These restrictions prohibit or limit our ability to, among other things,
incur additional debt, provide guarantees for indebtedness, grant liens, dispose of assets, liquidate,
dissolve, amalgamate, consolidate or effect corporate or capital reorganizations, declare distributions,
issue equity interests and create subsidiaries. A financial covenant in our corporate bonds and in our
corporate bank credit facilities limits our overall indebtedness to a percentage of total capitalization, a
restriction which may limit our ability to obtain additional financing, withstand downturns in our business
and take advantage of business and development opportunities. If we breach our covenants, our credit
facilities may be terminated or come due and such event may cause our credit rating to deteriorate and
subject Brookfield Renewable to higher interest and financing costs. We may also be required to seek
additional debt financing on terms that include more restrictive covenants, require repayment on an
accelerated schedule or impose other obligations that limit our ability to grow our business, acquire
needed assets or take other actions that we might otherwise consider appropriate or desirable.
Changes in our credit ratings may have an adverse effect on our financial position and ability to
raise capital.
The credit rating assigned to Brookfield Renewable or any of our subsidiaries’ debt securities may
not remain in effect for any given period of time. A rating may be changed or withdrawn entirely by the
relevant rating agency. A lowering or withdrawal of such ratings may have an adverse effect on our
financial position and ability to raise capital.
RISKS RELATED TO OUR GROWTH STRATEGY
We may be unable to identify sufficient investment opportunities and complete transactions as
planned.
Our strategy for building LP Unitholder value is to seek to acquire or develop high-quality assets
and businesses that generate sustainable and increasing cash flows, with the objective of achieving
appropriate risk-adjusted returns on our invested capital over the long-term. However, there is no
certainty that we will be able to find sufficient investment opportunities and complete transactions that
meet our investment criteria. Our investment criteria consider, among other things, the financial,
operating, governance and strategic merits of a proposed acquisition and, as such, there is no certainty
that we will be able to acquire or develop additional high-quality assets at attractive prices to continue
growing our business. Competition for assets is significant and competition from other well-capitalized
investors or companies may significantly increase the purchase price or prevent us from completing an
acquisition. Further, our growth initiatives are subject to a number of closing conditions, including, as
applicable, third party consents, regulatory approvals (including competition authorities) and other third
party approvals or actions that are beyond our control. If all or some of our growth initiatives are unable to
be completed on the terms agreed, we may need to delay certain acquisitions or abandon them
altogether or may not fully realize their anticipated benefit. In respect of Isagen, our goal is to, together
with our institutional partners, increase our ownership of shares well above the current 57.6% level.
However, there is no assurance that all or most of the remaining shareholders will tender their shares to
our tender offers.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 59
Future growth of our portfolio may subject us to additional risks and the expected benefits of our
transactions may not materialize.
A key part of Brookfield Renewable’s strategy involves seeking acquisition opportunities.
Acquisitions in general, and large-scale acquisitions in particular, have the potential to materially increase
the scale, scope and complexity of our operations. If we do not effectively manage the additional
operations, our business, financial condition and results of operations may be adversely affected.
Acquisitions will likely involve some or all of the following risks, which could materially and
adversely affect our business, financial condition or results of operations: the potential to not close or
otherwise realize the expected benefits of an announced transaction, the difficulty of integrating the
acquired operations and personnel into our current operations; the inability to achieve potential synergies;
potential disruption of our current operations; diversion of resources, including the time and attention of
Brookfield’s professionals; the difficulty of managing the growth of a larger organization; the risk of
entering markets in which we have little experience; the risk of becoming involved in labour, commercial
or regulatory disputes or litigation related to the new operations; the risk of environmental or other
liabilities associated with the acquired business; and the risk of a change of control resulting from an
acquisition triggering rights of third parties or government agencies under contracts with, or authorizations
held by the operating business being acquired. While it is our practice to conduct extensive due diligence
investigations into businesses being acquired, it is possible that due diligence may fail to uncover or
adequately assess all material risks in the business being acquired, whether operational, financial, legal
or otherwise. For example, we may fail to identify a change of control trigger in a material contract or
authorization, or a contractual counterparty or government agency may take a different view on the
interpretation of such a provision to that taken by us, thereby resulting in a dispute. The discovery of any
material liabilities subsequent to an acquisition, as well as the failure of an acquisition to perform
according to expectations, could have a material adverse effect on Brookfield Renewable’s business,
financial condition and results of operations. In addition, if returns are lower than anticipated from new
acquisitions, we may not be able to achieve growth in our distributions in line with our stated goals and
the market value of our units may decline.
The development of our generating facilities is subject to various construction risks and risks
associated with the various types of arrangements we enter into with communities and joint
venture partners.
Our ability to develop an economically successful project is dependent on, among other things,
our ability to construct a particular project on-time and on-budget. The construction and development of
generating facilities is subject to various environmental, engineering and construction risks that could
result in cost-overruns, delays and reduced performance. A number of factors that could cause such
delays, cost over-runs or reduced performance include, but are not limited to, permitting delays, changing
engineering and design requirements, the costs of construction, the performance and necessary
experience of contractors, labor disruptions and inclement weather. In addition, we enter into various
types of arrangements with communities and joint venture partners, including in some cases, Aboriginal
peoples, for the development of projects. Certain of these communities and partners may have or may
develop interests or objectives which are different from or even in conflict with our objectives. Any such
differences could have a negative impact on the success of our projects.
Government regulations providing incentives for renewable energy could change at any time.
Development of new renewable energy sources and the overall growth of the renewable energy
industry are dependent on state or provincial, national, supranational and international policies in support
of such development. Policies which incentivize the development of renewables include renewable
energy purchase obligations imposed on local service entities, tax incentives, including investment tax
credits, production tax credits, and accelerated depreciation and direct subsidies. Some of the
jurisdictions in which we operate provide such incentives, in one form or another, for investment in
renewable power. For example, in the Republic of Ireland, the majority of our assets are underpinned by
the REFIT program that ensures generators receive a minimum fixed annual electricity price, indexed by
inflation annually over a contract term of 15 years.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 60
The attractiveness of renewable energy to purchasers, as well as the economic return available
to project sponsors, is often dependent on the incentives that are available, and the availability of such
incentives is uncertain. There is a risk that government regulations that provide incentives for renewable
energy, or that have increased emission standards or other environmental regulation of traditional thermal
coal-fired generation, could change at any time in a manner that adversely impacts the market for
renewables generally. Any such change may impact the competitiveness of renewable energy generally
and the economic value and ability to develop our projects in particular. In addition, some of these
incentives are subject to sunset provisions which mean they will expire unless renewed. The budget
difficulties facing many governments create greater challenges and uncertainty in getting incentives
renewed. In addition, even if incentives are renewed prior to their expiration, uncertainty regarding
renewal can create substantial risks and delays for developers of renewable power projects. As a result,
we may face reduced ability to develop our project pipeline and realize our development growth
objectives. We may also suffer material write-offs of development assets as a result.
RISKS RELATED TO OUR RELATIONSHIP WITH BROOKFIELD ASSET MANAGEMENT
Brookfield exercises substantial influence over Brookfield Renewable and we are highly
dependent on the Service Provider.
A subsidiary of Brookfield Asset Management is the sole shareholder of the managing general
partner of Brookfield Renewable. As a result of its ownership of the managing general partner, Brookfield
is able to control the appointment and removal of the managing general partner’s directors and,
accordingly, exercise substantial influence over Brookfield Renewable. In addition, Brookfield Renewable
holds its interest in its operating entities indirectly through BRELP and will hold any future acquisitions
indirectly through BRELP, the general partner of which is indirectly owned by Brookfield. As Brookfield
Renewable’s only substantial asset is the limited partnership interests that it holds in BRELP, except
future rights under the Voting Agreement, Brookfield Renewable does not have a right to participate
directly in the management or activities of BRELP or its holding entities, including with respect to the
making of decisions (although it has the right to remove and replace the general partner of BRELP).
Brookfield Renewable and BRELP depend on the management and administration services
provided by or under the direction of the Service Provider under our Master Services Agreement.
Brookfield personnel and support staff that provide services to us under our Master Services Agreement
are not required to have as their primary responsibility the management and administration of Brookfield
Renewable or BRELP or to act exclusively for either of us and our Master Services Agreement does not
require any specific individuals to be provided by Brookfield. Any failure to effectively manage our current
operations or to implement our strategy could have a material adverse effect on our business, financial
condition and results of operations. Our Master Services Agreement continues in perpetuity, until
terminated in accordance with its terms.
ADDITIONAL INFORMATION
Additional information, including our Form 20-F filed with the SEC and securities regulators in
Canada, are available on our website at www.brookfieldrenewable.com, on SEC’s website at
www.sec.gov and on SEDAR’s website at www.sedar.com.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 61
SUBSEQUENT EVENTS
Acquisition of Isagen
In January 2016 we, with our institutional partners, acquired a 57.6% controlling interest in Isagen
from the Colombian government. Isagen is Colombia’s third-largest power generation company and owns
and operates a 3,032 MW portfolio, consisting predominantly of a portfolio of six, largely reservoir-based,
hydroelectric facilities. Annual generation is expected to approximate 15,000 GWh. In addition, the
portfolio includes approximately 3,800 MW of attractive medium to long-term development projects
providing further growth opportunity.
Aggregate consideration was approximately $2.0 billion (COP 6.7 trillion) for the initial 57.6%
interest. Brookfield Renewable’s initial investment is $225 million for a 9% economic interest in Isagen
after accounting for the non-controlling interests of its institutional partners. Brookfield Renewable is the
general partner of and effectively controls the entity that acquired the 57.6% interest in Isagen.
Following the closing of the acquisition, our consortium is required to conduct two mandatory
tender offers (collectively, the “MTO”) with respect to the remaining Isagen shares. If our consortium is
successful in acquiring all of the remaining outstanding Isagen shares, a further approximately $1.4 billion
(COP 4.8 trillion) would be invested. Brookfield Renewable’s interest in Isagen would then increase to
approximately 23% and a further approximate $400 million of equity would be invested.
The financing for the initial 57.6% interest and the anticipated financing if all of the Isagen shares
are tendered is expected as follows:
(MILLIONS)
Non-recourse borrowings
Equity
Non-controlling interests
Brookfield Renewable
Initial
57.6%
MTO
42.4%
$
510 $
240 $
1,244
225
806
400
100%
750
2,050
625
$
1,979 $
1,446 $
3,425
In association with the Isagen acquisition, we and our institutional partners secured financing in
the amount of $750 million of which $510 million was drawn to partially fund the initial 57.6% interest. The
loan bears interest at a floating interest rate of LIBOR plus a margin of 250 basis points and matures in
January 2021. We also secured a one-year, $500 million, non-revolving corporate credit facility. The
terms of this credit facility are consistent with the terms of our corporate credit facilities and the applicable
margin is 1.20%.
The estimated fair values of the assets acquired and liabilities assumed will be disclosed in the
Q1 2016 interim report and financial statements with final figures expected within 12 months of the
acquisition date.
Acquisition of Brazil hydroelectric facilities
In January 2016, we completed the acquisition of two hydroelectric facilities in Brazil. The
aggregate capacity of the two facilities is 51 MW, and annual generation is expected to be 293 GWh. We
will retain a 100% interest in the facilities.
Equity transactions
In February 2016, we announced the completion of the Exchange Offer for the exchange of
Series 5 Preference Shares for Series 5 Preferred LP Units. A total of 2,885,496 Series 5 Preference
Shares were tendered and exchanged for an equal number of Series 5 Preferred LP Units.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 62
Distribution increase
In February 2016, we announced an increase in LP Unitholder distributions to $1.78 per LP Unit
on an annualized basis, an increase of 12 cents per LP Unit, to take effect with the first quarter
distribution payable in March 2016.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 63
FINANCIAL REVIEW BY SEGMENTS FOR THE YEAR ENDED DECEMBER 31, 2015
The following table reflects Adjusted EBITDA, Funds From Operations, Adjusted Funds From
Operations, and provides a reconciliation to net income and cash flows from operating activities for the
year ended December 31:
Corporate
(MILLIONS)
Revenues
Other income(2)(3)(4)
Share of cash earnings from equity-accounted
investments
Direct operating costs
Adjusted EBITDA(5)
Fixed earnings adjustment(6)
Interest expense - borrowings
Management service costs
Current income taxes
Less: cash portion of non-controlling interests
Participating non-controlling interests - in
operating subsidiaries
Preferred equity
Less: distributions to preferred limited partners
Funds From Operations(5)
Less: adjusted sustaining capital expenditures(7)
Adjusted Funds From Operations(5)
Add: adjusted sustaining capital expenditures
Add: cash portion of non-controlling interests(6)
Add: distributions to preferred limited partners
Less: fixed earnings adjustment
Other items:
Depreciation and amortization
Unrealized financial instruments (loss) gain
Share of non-cash loss from equity-
accounted investments
Deferred income tax recovery
Other
Net income
Adjustments for non-cash items
Dividends received from equity accounted
investments
Changes in due to or from related parties
Net change in working capital balances
Cash flows from operating activities
(1) Other includes biomass and Co-gen.
(2)
Hydroelectric
$
1,228 $
54
Wind
366 $
22
and Other(1)
2014
2015
34 $ 1,628 $ 1,704
10
81
5
20
(406)
896
-
(246)
-
(17)
-
(102)
286
-
(101)
-
-
-
(44)
(5)
-
(82)
(48)
(1)
20
(552)
1,177
-
(429)
(48)
(18)
26
(524)
1,216
11
(415)
(51)
(18)
(107)
-
-
526 $
(72)
-
-
113 $
(5)
(30)
(1)
(172) $
$
$
$
(184)
(30)
(1)
467 $
(60)
407
60
255
1
-
(616)
(9)
(10)
78
(63)
103 $
546
19
(18)
(62)
588 $
(145)
(38)
-
560
(58)
502
58
183
-
(11)
(548)
10
(23)
29
3
203
497
30
(10)
(20)
700
(3)
(4)
In July 2015, Brookfield Renewable, along with its institutional partners, sold its interest in a 102 MW wind facility in California to
a third party for gross cash consideration of $143 million, resulting in a gain of $53 million. See Note 5 - Disposal of assets and
Note 23 - Other income in our audited consolidated financial statements. Brookfield Renewable’s share of the gain was $12
million, representing the 22% interest in the facility and is net of the cash portion of non-controlling interests.
In July 2015, concession agreements relating to two Brazilian hydroelectric facilities expired. Brookfield Renewable elected not
to renew these concession agreements in exchange for compensation of $17 million.
In 2015, Brookfield Renewable realized gains of $31 million on the settlement of foreign currency contracts. See Note 23 - Other
income in our audited consolidated financial statements.
(5) Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures”.
(6) The fixed earnings adjustment relates to Brookfield Renewable’s investment in the acquisition of the wind portfolio in Ireland.
Pursuant to the terms of the purchase and sale agreement, Brookfield Renewable acquired an economic interest in the wind
portfolio from January 1, 2014. The transaction closed on June 30, 2014, and accordingly under IFRS, the $11 million net Funds
From Operations contribution was recorded as part of the purchase price.
(7) Based on long-term sustaining capital expenditure plans.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 64
FINANCIAL REVIEW BY SEGMENTS FOR THE YEAR ENDED DECEMBER 31, 2014
The following table reflects Adjusted EBITDA, Funds From Operations, Adjusted Funds From
Operations, and provides a reconciliation to net income and cash flows from operating activities for the
year ended December 31:
(MILLIONS)
Revenues
Other income
Share of cash earnings from equity-accounted
investments
Direct operating costs
Adjusted EBITDA(1)
Fixed earnings adjustment(2)
Interest expense - borrowings
Management service costs
Current income taxes
Less: cash portion of non-controlling interests
Participating non-controlling interests - in
operating subsidiaries
Preferred equity
Funds From Operations(1)
Less: adjusted sustaining capital expenditures(3)
Adjusted Funds From Operations(1)
Add: adjusted sustaining capital expenditures
Add: cash portion of non-controlling interests
Less: fixed earnings adjustment
Other items:
Depreciation and amortization
Unrealized financial instruments gain
Share of non-cash loss from equity-
accounted investments
Deferred income tax recovery
Other
Net income
Adjustments for non-cash items
Dividends received from equity accounted
investments
Corporate and
Hydroelectric
$
1,378 $
10
Wind
297 $
-
Co-gen
2013
2014
29 $ 1,704 $ 1,706
11
10
-
26
(408)
1,006
-
(242)
-
(18)
-
(77)
220
11
(86)
-
-
-
(39)
(10)
-
(87)
(51)
-
26
(524)
1,216
11
(415)
(51)
(18)
21
(530)
1,208
-
(410)
(41)
(19)
(98)
-
648 $
(47)
-
98 $
-
(38)
(186) $
$
$
(145)
(38)
560 $
(58)
502
58
183
(11)
(548)
10
(23)
29
3
203 $
497
(107)
(37)
594
(56)
538
56
144
-
(535)
37
(12)
18
(31)
215
514
Changes in due to or from related parties
Net change in working capital balances
Cash flows from operating activities
(1) Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures”.
(2) The fixed earnings adjustment relates to Brookfield Renewable’s investment in the acquisition of the wind portfolio in Ireland.
Pursuant to the terms of the purchase and sale agreement, Brookfield Renewable acquired an economic interest in the wind
portfolio from January 1, 2014. The transaction closed on June 30, 2014, and accordingly under IFRS, the $11 million net Funds
From Operations contribution was recorded as part of the purchase price.
$
(3) Based on long-term sustaining capital expenditure plans.
30
(10)
(20)
700 $
16
(11)
1
735
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 65
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report contains forward-looking statements and information, within the meaning of Canadian
securities laws and “forward-looking statements” within the meaning of Section 27A of the U.S. Securities
Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, “safe
harbor” of the United States Private Securities Litigation Reform Act of 1995 and in any applicable
Canadian securities regulations, concerning the business and operations of Brookfield Renewable.
Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections,
guidance or other statements that are not statements of fact. Forward-looking statements in this Annual
Report include statements regarding the quality of Brookfield Renewable’s assets and the resiliency of
the cash flow they will generate, Brookfield Renewable’s anticipated financial performance, future
commissioning of assets, contracted portfolio, technology diversification, acquisition opportunities,
expected completion of acquisitions, future energy prices and demand for electricity, economic recovery,
achieving
long-term average generation, project development and capital expenditure costs,
diversification of shareholder base, energy policies, economic growth, growth potential of the renewable
asset class, the future growth prospects and distribution profile of Brookfield Renewable and Brookfield
Renewable’s access to capital. Forward-looking statements can be identified by the use of words such as
“plans”, “expects”, “scheduled”, “estimates”, “intends”, “anticipates”, “believes”, “potentially”, “tends”,
“continue”, “attempts”, “likely”, “primarily”, “approximately”, “endeavours”, “pursues”, “strives”, “seeks”, or
variations of such words and phrases, or statements that certain actions, events or results “may”, “could”,
“would”, “might” or “will” be taken, occur or be achieved. Although we believe that our anticipated future
results, performance or achievements expressed or implied by the forward-looking statements and
information in this Annual Report are based upon reasonable assumptions and expectations, we cannot
assure you that such expectations will prove to have been correct. You should not place undue reliance
on forward-looking statements and information as such statements and information involve known and
unknown risks, uncertainties and other factors which may cause our actual results, performance or
achievements to differ materially from anticipated future results, performance or achievement expressed
or implied by such forward-looking statements and information.
Factors that could cause actual results to differ materially from those contemplated or implied by forward-
looking statements include, but are not limited to, the following: we are not subject to the same disclosure
requirements as a U.S. domestic issuer; the separation of economic interest from control or the
incurrence of debt at multiple levels within our organizational structure; being deemed an “investment
company” under the U.S. Investment Company Act of 1940; the effectiveness of our internal controls over
financial reporting; changes to hydrology at our hydroelectric stations, to wind conditions at our wind
energy facilities or to crop supply or weather generally at any biomass cogeneration facility;
counterparties to our contracts not fulfilling their obligations; increases in water rental costs (or similar
fees) or changes to the regulation of water supply; volatility in supply and demand in the energy market;
the increasing amount of uncontracted generation in our portfolio; industry risks relating to the power
markets in which we operate; increased regulation of our operations; contracts, concessions and licenses
expiring and not being renewed or replaced on similar terms; increases in the cost of operating our plants;
our failure to comply with conditions in, or our inability to maintain, governmental permits; equipment
failures; dam failures and the costs of repairing such failures; force majeure events; uninsurable losses;
adverse changes in currency exchange rates; availability and access to interconnection facilities and
transmission systems; health, safety, security and environmental risks; disputes, governmental and
regulatory investigations and litigation; our operations being affected by local communities; fraud, bribery,
corruption, other illegal acts or inadequate or failed internal processes or systems; our reliance on
computerized business systems; advances in technology that impair or eliminate the competitive
advantage of our projects; newly developed technologies in which we invest not performing as
anticipated; labour disruptions and economically unfavourable collective bargaining agreements; our
inability to finance our operations due to the status of the capital markets; our inability to effectively
manage our foreign currency exposure; operating and financial restrictions imposed on us by our loan,
debt and security agreements; changes in our credit ratings; changes to government regulations that
provide incentives for renewable energy; our inability to identify sufficient investment opportunities and
complete transactions; the growth of our portfolio and our inability to realize the expected benefits of our
transactions; our inability to develop existing sites or find new sites suitable for the development of
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 66
greenfield projects; delays, cost overruns and other problems associated with the construction,
development and operation of our generating facilities; the arrangements we enter into with communities
and joint venture partners; Brookfield Asset Management’s election not to source acquisition opportunities
for us and our lack of access to all renewable power acquisitions that Brookfield Asset Management
identifies; we do not have control over all our operations; our ability to issue equity or debt for future
acquisitions and developments is dependent on capital markets; foreign laws or regulation to which we
become subject as a result of future acquisitions in new markets; the departure of some or all of
Brookfield Asset Management’s key professionals; our relationship with, and our dependence on,
Brookfield Asset Management and Brookfield Asset Management’s significant influence over us; and risks
related to changes in how Brookfield Asset Management elects to hold its ownership interests in the
Partnership.
We caution that the foregoing list of important factors that may affect future results is not exhaustive. The
forward-looking statements represent our views as of the date of this Annual Report and should not be
relied upon as representing our views as of any date subsequent to the date of this Annual Report. While
we anticipate that subsequent events and developments may cause our views to change, we disclaim
any obligation to update the forward-looking statements, other than as required by applicable law. For
further information on these known and unknown risks, please see “Risk Factors” included in our Form
20-F.
CAUTIONARY STATEMENT REGARDING USE OF NON-IFRS MEASURES
This Annual Report contains references to Adjusted EBITDA, Funds From Operations and Adjusted
Funds From Operations which are not generally accepted accounting measures under IFRS and
therefore may differ from definitions of Adjusted EBITDA, Funds From Operations and Adjusted Funds
From Operations used by other entities. We believe that Adjusted EBITDA, Funds From Operations and
Adjusted Funds From Operations are useful supplemental measures that may assist investors in
assessing the financial performance and the cash anticipated to be generated by our operating portfolio.
Neither Adjusted EBITDA, Funds From Operations nor Adjusted Funds From Operations should be
considered as the sole measure of our performance and should not be considered in isolation from, or as
a substitute for, analysis of our financial statements prepared in accordance with IFRS.
A reconciliation of Adjusted EBITDA, Funds From Operations and Adjusted Funds From Operations to
net income and cash flows from operating activities is presented in our Management’s Discussion and
Analysis. We have also provided a reconciliation of Adjusted EBITDA and Funds From Operations to net
income in Note 29 - Segmented information in our audited consolidated financial statements.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 67
MANAGEMENT’S RESPONSIBILITY
Management’s Responsibility for Financial Statements
The accompanying consolidated financial statements have been prepared by the Brookfield Renewable
Energy Partners L.P. (“Brookfield Renewable”) management which is responsible for their integrity,
consistency, objectivity and reliability. To fulfill this responsibility, Brookfield Renewable maintains
policies, procedures and systems of internal control to ensure that its reporting practices and accounting
and administrative procedures are appropriate to provide a high degree of assurance that relevant and
reliable financial information is produced and assets are safeguarded. These controls include the careful
selection and training of employees, the establishment of well-defined areas of responsibility and
accountability for performance, and the communication of policies and code of conduct throughout the
company.
These consolidated financial statements have been prepared in conformity with International Financial
Reporting Standards as issued by the International Accounting Standards Board and, where appropriate,
reflect estimates based on management’s judgment.
Ernst & Young LLP, the Independent Registered Public Accountants appointed by the directors of the
general partner of Brookfield Renewable, have audited the consolidated financial statements in
accordance with the standards of the Public Company Accounting Oversight Board (United States) to
enable them to express to the partners their opinion on the consolidated financial statements. Their report
outlines the scope of their examination and opinion on the consolidated financial statements.
The consolidated financial statements have been further reviewed and approved by the Board of
Directors of the general partner of Brookfield Renewable acting through its Audit Committee, which is
comprised of directors who are not officers or employees of Brookfield Renewable. The Audit Committee,
which meets with the auditors and management to review the activities of each and reports to the Board
of Directors, oversees management’s responsibilities for the financial reporting and internal control
systems. The auditors have full and direct access to the Audit Committee and meet periodically with the
committee both with and without management present to discuss their audit and related findings.
Sachin Shah
Chief Executive Officer
February 26, 2016
Nicholas Goodman
Chief Financial Officer
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 68
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Partners of Brookfield Renewable Energy Partners L.P.
We have audited the accompanying consolidated financial statements of Brookfield Renewable Energy
Partners L.P. (“Brookfield Renewable”), which comprise the consolidated balance sheets as at December
31, 2015 and 2014, and the related consolidated statements of income, comprehensive income (loss),
changes in equity and cash flows for each of the years in the three-year period ended December 31,
2015, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board, and for such internal control as management determines is necessary to
enable the preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and
the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order
to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide
a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of Brookfield Renewable Energy Partners L.P. as at December 31, 2015 and 2014 and its
financial performance and its cash flows for each of the years in the three-year period ended December
31, 2015, in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 69
Other Matter
We have also audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), Brookfield Renewable’s internal control over financial reporting as of December
31, 2015, based on the criteria established in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report
dated February 26, 2016 expressed an unqualified opinion on Brookfield Renewable’s internal control
over financial reporting.
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada
February 26, 2016
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 70
INTERNAL CONTROL OVER FINANCIAL REPORTING
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of Brookfield Renewable Energy Partners, L.P. (“Brookfield Renewable”) is responsible for
establishing and maintaining adequate internal control over financial reporting. Internal control over
financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and
the Chief Financial Officer and effected by the Board of Directors, management and other personnel to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board as defined in Regulation 240.13a–15(f) or
240.15d–15(f).
Management assessed the effectiveness of Brookfield Renewable’s internal control over financial
reporting as of December 31, 2015, based on the criteria set forth in Internal Control – Integrated
Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this assessment, management concludes that, as of December 31, 2015,
Brookfield Renewable’s internal control over financial reporting is effective. Management excluded from
its design and assessment of internal control over financial reporting the internal controls of the Brazil
Portfolio, Portugal Wind Portfolio and Scotland Wind Pipeline acquired in 2015, whose total assets, net
assets, total revenues and net income on a combined basis constitute approximately 6%, 7%, 6% and
3%, respectively, of the consolidated financial statement amounts as of and for the year ended December
31, 2015.
Brookfield Renewable’s internal control over financial reporting as of December 31, 2015, has been
audited by Ernst & Young LLP, the Independent Registered Public Accounting Firm, who also audited
Brookfield Renewable’s consolidated financial statements for the year ended December 31, 2015. As
stated in the Report of Independent Registered Public Accounting Firm, Ernst & Young LLP expressed an
unqualified opinion on the effectiveness of Brookfield Renewable’s internal control over financial reporting
as of December 31, 2015.
Sachin Shah
Chief Executive Officer
February 26, 2016
Nicholas Goodman
Chief Financial Officer
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 71
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Partners of Brookfield Renewable Energy Partners L.P.
We have audited Brookfield Renewable Energy Partners L.P. (“Brookfield Renewable”)’s internal control
over financial reporting as at December 31, 2015, based on the criteria established in Internal Control—
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). Brookfield Renewable’s management is responsible
for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting, included in the accompanying Management’s
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on
Brookfield Renewable’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with International Financial Reporting Standards as issued by the
International Accounting Standards Board. A company’s internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, internal control over
financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the
effectiveness of the internal control over financial reporting to future periods are subject to the risk that the
controls may become inadequate because of changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.
As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting,
management’s assessment of and conclusion on the effectiveness of internal control over financial
reporting did not include the internal controls of the Brazil Portfolio, Portugal Wind Portfolio and Scotland
Wind Pipeline acquired in 2015, which are included in the 2015 consolidated financial statements of
Brookfield Renewable and constituted approximately 6% and 7% of total and net assets, respectively, as
of December 31, 2015 and 6% and 3% of revenues and net income, respectively, for the year then
ended. Our audit of internal control over financial reporting of Brookfield Renewable also did not include
an evaluation of the internal control over financial reporting of the Brazil Portfolio, Portugal Wind Portfolio
and Scotland Wind Pipeline acquired in 2015.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 72
In our opinion, Brookfield Renewable maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2015, based on the COSO criteria.
We have also audited, in accordance with Canadian generally accepted auditing standards and the
standards of the Public Company Accounting Oversight Board (United States), the 2015 consolidated
financial statements of Brookfield Renewable and our report dated February 26, 2016 expressed an
unqualified opinion on those financial statements.
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada
February 26, 2016
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 73
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.
CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31
(MILLIONS)
Assets
Current assets
Cash and cash equivalents
Restricted cash
Trade receivables and other current assets
Financial instrument assets
Due from related parties
Financial instrument assets
Equity-accounted investments
Property, plant and equipment, at fair value
Deferred income tax assets
Other long-term assets
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Financial instrument liabilities
Due to related parties
Current portion of long-term debt
Financial instrument liabilities
Long-term debt and credit facilities
Deferred income tax liabilities
Other long-term liabilities
Equity
Non-controlling interests
Participating non-controlling interests - in operating
subsidiaries
General partnership interest in a holding subsidiary
held by Brookfield
Participating non-controlling interests - in a holding subsidiary
- Redeemable/Exchangeable units held by Brookfield
Preferred equity
Preferred limited partners' equity
Limited partners' equity
Notes
2015
2014
6
7
8
9
10
9
11
12
16
13
14
9
10
15
9
15
16
17
19
19
19
19
20
21
$
$
$
$
$
$
$
63
198
256
26
57
600
6
197
18,358
157
189
19,507
284
127
64
770
1,245
64
6,568
2,695
172
10,744
150
232
201
48
63
694
18
273
18,566
142
156
19,849
253
99
79
256
687
75
7,422
2,637
147
10,968
2,587
2,062
52
59
2,559
610
128
2,827
8,763
19,507
$
2,865
728
-
3,167
8,881
19,849
The accompanying notes are an integral part of these consolidated financial statements.
Approved on behalf of Brookfield Renewable Energy Partners L.P.:
Patricia Zuccotti
Director
David Mann
Director
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 74
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31
(MILLIONS, EXCEPT AS NOTED)
Revenues
Other income
Direct operating costs
Management service costs
Interest expense – borrowings
Share of earnings from equity-accounted investments
Unrealized financial instruments (loss) gain
Depreciation
Other
Income before income taxes
Income tax recovery (expense)
Current
Deferred
Net income
Net income attributable to:
Non-controlling interests
Participating non-controlling interests - in
operating subsidiaries
General partnership interest in a holding
subsidiary held by Brookfield
Participating non-controlling interests - in a
holding subsidiary - Redeemable/
Exchangeable units held by Brookfield
Preferred equity
Preferred limited partners' equity
Limited partners' equity
Basic and diluted earnings per LP Unit
Notes
2015
2014
2013
10
$ 1,628 $ 1,704 $ 1,706
5, 23
24
10
15
11
9
12
25
16
16
19
19
19
19
20
21
122
(552)
(48)
(429)
10
(9)
(616)
(63)
43
(18)
78
60
10
(524)
(51)
(415)
3
10
(548)
3
192
(18)
29
11
11
(530)
(41)
(410)
9
37
(535)
(31)
216
(19)
18
(1)
$
103 $
203 $
215
69
-
1
30
1
2
51
1
55
38
-
58
41
1
67
37
-
69
$
$
103 $
203 $
0.01 $
0.42 $
215
0.52
The accompanying notes are an integral part of these consolidated financial statements.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 75
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE YEAR ENDED DECEMBER 31
(MILLIONS)
Net income
Other comprehensive income (loss) that will not be
reclassified to net income
Notes
2015
103 $
2014
203 $
2013
215
$
Revaluations of property, plant and equipment
11, 12
1,293
1,700
(211)
Actuarial gain (loss) on defined benefit plans
Deferred income taxes on above items
Total items that will not be reclassified to net income
Other comprehensive (loss) income that may be
reclassified to net income
Financial instruments designated as cash-flow hedges
Gain (loss) arising during the year
Reclassification adjustments for amounts
recognized in net income
Foreign currency translation
Deferred income taxes on above items
Total items that may be reclassified subsequently to
net income
Other comprehensive (loss) income
Comprehensive income (loss)
Comprehensive income (loss) attributable to:
Non-controlling interests
Participating non-controlling interests - in
operating subsidiaries
General partnership interest in a holding
subsidiary held by Brookfield
Participating non-controlling interests - in a
holding subsidiary -Redeemable/
Exchangeable units held by Brookfield
Preferred equity
Preferred limited partners' equity
Limited partners' equity
22
16
9
9
26
16
19
19
19
19
20
21
5
(283)
1,015
(8)
(369)
1,323
12
104
(95)
10
(60)
60
(32)
(1,083)
(8)
(1,113)
(98)
-
(398)
3
(455)
868
$
5 $ 1,071 $
(1)
(501)
(11)
(453)
(548)
(333)
273
310
140
(2)
8
(5)
(86)
(87)
1
(94)
379
(31)
-
405
$
5 $ 1,071 $
(224)
(16)
-
(228)
(333)
The accompanying notes are an integral part of these consolidated financial statements.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 76
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Accumulated other comprehensive income
Non-controlling interests
YEAR ENDED DECEMBER 31
(MILLIONS)
Balance, as at December 31, 2014
Net income
Other comprehensive (loss) income
Preferred LP Units issued -
net proceeds - (Note 20)
LP Units and preferred shares purchased
for cancellation (Note 19, 21)
Capital contributions (Note 19)
Distributions or dividends declared
Distribution reinvestment plan
Other
Change in year
Balance, as at December 31, 2015
Balance, as at December 31, 2013
Net income
Other comprehensive income (loss)
LP Units issued
Net proceeds
Adjustments
Capital contributions
Distributions or dividends declared
Distribution reinvestment plan
Other
Change in year
Balance, as at December 31, 2014
General
partnership
Participating
non-controlling
interests - in a
interest in holding subsidiary
- Redeemable
a holding
/Exchangeable
subsidiary
units held by
held by
Brookfield
Brookfield
Total
equity
2,865 $ 8,881
103
(98)
1
(87)
Limited
partners'
Foreign
currency Revaluation
surplus
equity translation
Actuarial
losses on
defined
benefit Cash flow
hedges
plans
limited
Total Preferred
limited
partners' partners' Preferred
equity
equity
equity
Participating
non-controlling
interests - in
operating
subsidiaries
-
(3)
-
-
-
-
-
-
(3)
$ (241) $ (241) $ 3,685 $
-
(429)
-
334
2
-
(9) $
-
2
-
-
-
-
(9)
-
(239)
5
(3)
(244)
-
-
-
-
-
(429)
$ (485) $ (670) $ 4,019 $
-
-
-
-
-
334
$ (337) $
58
-
(83) $ 3,160 $
-
(158)
-
527
285
(38)
-
(216)
3
4
96
-
-
-
-
-
-
(158)
$ (241) $ (241) $ 3,685 $
-
-
-
-
-
(2)
525
-
-
-
-
-
2
(7) $
(7) $
-
(2)
-
-
-
-
-
-
(2)
(9) $
(27) $ 3,167 $
2
(96)
- $ 728 $
1
-
30
(117)
2,062 $
69
204
59 $
-
(2)
-
128
-
-
-
-
128
(9)
-
(239)
5
(3)
(340)
-
-
(1)
-
-
128
(1)
-
(30)
-
-
(118)
(30) $ 2,827 $ 128 $ 610 $
(7) $ 2,726 $
-
(20)
58
347
- $ 796 $
-
-
38
(69)
285
(38)
-
(216)
3
2
441
-
-
-
-
-
-
(20)
(27) $ 3,167 $
-
-
-
(38)
-
1
(68)
-
-
-
-
-
-
-
- $ 728 $
-
460
(208)
-
-
525
2,587 $
1,303 $
51
259
-
-
610
(149)
-
(12)
759
2,062 $
-
-
(12)
-
7
(7)
52 $
54 $
1
7
-
1
-
(6)
-
2
5
59 $
-
-
(217)
-
(3)
(306)
(10)
460
(707)
5
1
(118)
2,559 $ 8,763
2,657 $ 7,536
203
868
55
324
-
37
-
(201)
-
(7)
208
285
-
610
(610)
3
(14)
1,345
2,865 $ 8,881
The accompanying notes are an integral part of these consolidated financial statements.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 77
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Accumulated other comprehensive income
Non-controlling interests
YEAR ENDED DECEMBER 31
(MILLIONS)
Balance, as at December 31, 2012
Net income
Other comprehensive (loss) income
Preferred shares issued
Capital contributions
Distributions or dividends declared
Distribution reinvestment plan
Other
Change in year
Balance, as at December 31, 2013
General
partnership
Participating
non-controlling
interests - in a
interest in holding subsidiary
- Redeemable
a holding
/Exchangeable
subsidiary
units held by
held by
Brookfield
Brookfield
Actuarial
losses on
defined
benefit Cash flow
hedges
Total
limited
Participating
non-controlling
interests - in
operating
subsidiaries
Limited
partners'
Foreign
currency Revaluation
surplus
equity translation
$ (227) $
125 $ 3,285 $
69
-
-
(193)
2
12
(110)
$ (337) $
-
(208)
-
-
-
-
(208)
-
(111)
-
-
-
(14)
(125)
(83) $ 3,160 $
plans
(11) $
-
4
-
-
-
-
4
(7) $
equity
(25) $ 3,147 $
-
18
69
(297)
partners' Preferred
equity
500 $
37
(53)
349
-
(37)
-
-
296
796 $
-
(193)
2
(2)
(421)
-
-
-
-
18
(7) $ 2,726 $
1,028 $
41
99
-
265
(122)
-
(8)
275
1,303 $
63 $
1
(6)
-
(4)
-
-
(9)
54 $
Total
equity
3,070 $ 7,808
215
(548)
349
265
(544)
2
(11)
(272)
2,657 $ 7,536
67
(291)
-
-
(188)
-
(1)
(413)
The accompanying notes are an integral part of these consolidated financial statements.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 78
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31
(MILLIONS)
Operating activities
Net income
Adjustments for the following non-cash items:
Depreciation
Unrealized financial instrument loss (gain)
Share of earnings from equity accounted investments
Deferred income tax recovery
Gain on disposal
Other non-cash items
Dividends received from equity-accounted investments
Changes in due to or from related parties
Net change in working capital balances
Financing activities
Long-term debt - borrowings
Long-term debt - repayments
Capital contributions from participating non-controlling
interests - in operating subsidiaries
Issuance of preferred shares
Issuance of preferred limited partnership units
Issuance of LP Units
Repurchase of LP Units and preferred shares
Distributions paid:
To participating non-controlling interests - in operating
subsidiaries
To preferred shareholders
To unitholders of Brookfield Renewable or BRELP
Investing activities
Acquisitions
Investment in:
Sustaining capital expenditures
Development and construction of renewable power
generating assets
Investment tax credits related to renewable power
generating assets
Proceeds from disposal of assets
Capital distributions received from equity-accounted investments, net
Investment in securities
Restricted cash and other
Foreign exchange loss on cash
Cash and cash equivalents
(Decrease) increase
Balance, beginning of year
Balance, end of year
Supplemental cash flow information:
Interest paid
Interest received
Income taxes paid
Notes
2015
2014
2013
$
103 $
203 $
215
12
9
11
16
5, 23
11
27
15
15
19
19
20
19, 21
19
19, 21
4
12
12
12
5
11
616
9
(10)
(78)
(53)
62
19
(18)
(62)
588
548
(10)
(3)
(29)
-
(9)
30
(10)
(20)
700
535
(37)
(9)
(18)
-
43
16
(11)
1
735
944
(855)
2,118
(1,046)
1,353
(1,683)
460
-
128
-
(10)
(208)
(31)
(461)
(33)
610
-
-
285
-
(149)
(39)
(480)
1,299
265
337
-
-
-
(122)
(35)
(378)
(263)
(663)
(1,838)
(241)
(76)
(108)
(79)
(209)
(78)
(147)
-
143
144
(18)
56
(623)
(19)
(87)
150
$
$
63 $
414 $
18
32
23
-
-
(25)
(11)
(2,037)
(15)
(53)
203
150 $
406 $
10
33
-
-
-
-
70
(397)
(9)
66
137
203
388
11
29
The accompanying notes are an integral part of these consolidated financial statements.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 79
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND DESCRIPTION OF THE BUSINESS
The business activities of Brookfield Renewable Energy Partners L.P. (“Brookfield Renewable”) consist of
owning a portfolio of renewable power generating facilities in North America, Latin America and Europe.
Brookfield Renewable is a publicly traded limited partnership established under the laws of Bermuda
pursuant to an amended and restated limited partnership agreement dated November 20, 2011.
The registered office of Brookfield Renewable is 73 Front Street, Fifth Floor, Hamilton HM12, Bermuda.
The immediate parent of Brookfield Renewable is its general partner, Brookfield Renewable Partners
Limited (“BRPL”). The ultimate parent of Brookfield Renewable is Brookfield Asset Management Inc.
(“Brookfield Asset Management”). Brookfield Asset Management and its subsidiaries, other than
Brookfield Renewable, are also individually and collectively referred to as “Brookfield” in these financial
statements.
Brookfield Renewable’s non-voting limited partnership units (“LP Units”) are traded under the symbol
“BEP” on the New York Stock Exchange and under the symbol “BEP.UN” on the Toronto Stock
Exchange.
Unless the context indicates or requires otherwise, the term “Brookfield Renewable” means Brookfield
Renewable Energy Partners L.P. and its controlled entities.
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
(a) Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The
accounting policies used in the consolidated financial statements are based on the IFRS applicable as at
December 31, 2015, and encompasses individual IFRS, International Accounting Standards (“IAS”), and
interpretations made by the International Financial Reporting Interpretations Committee (“IFRIC”) and the
Standing Interpretations Committee (“SIC”). The policies set out below are consistently applied to all
periods presented, unless otherwise noted.
These consolidated financial statements have been authorized for issuance by the Board of Directors of
its general partner, BRPL, on February 26, 2016.
Certain comparative figures have been reclassified to conform to the current year’s presentation.
All figures are presented in millions of United States (“U.S.”) dollars unless otherwise noted.
(b) Basis of preparation
The consolidated financial statements have been prepared on the basis of historical cost, except for the
revaluation of property, plant and equipment and certain assets and liabilities which have been measured
at fair value. Cost is recorded based on the fair value of the consideration given in exchange for assets.
Consolidation
(i)
These consolidated financial statements include the accounts of Brookfield Renewable and its
subsidiaries, which are the entities over which Brookfield Renewable has control. An investor controls an
investee when it is exposed, or has rights, to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over the investee. Non-controlling interests in the
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 80
equity of Brookfield Renewable’s subsidiaries are shown separately in equity in the consolidated balance
sheets.
issued
redeemable-exchangeable
Brookfield Renewable has entered into a voting agreement with Brookfield, which provides Brookfield
Renewable with control of the general partner of Brookfield Renewable Energy L.P. (“BRELP”), a holding
subsidiary. Accordingly, Brookfield Renewable consolidates the accounts of BRELP and its subsidiaries.
In addition, BRELP
to Brookfield
(“Redeemable/Exchangeable partnership units”), pursuant to which the holder may at its request require
BRELP to redeem the Redeemable/Exchangeable partnership units for cash consideration. This right is
subject to Brookfield Renewable’s right of first refusal which entitles it, at its sole discretion, to elect to
acquire all of the Redeemable/Exchangeable partnership units so presented to BRELP that are tendered
for redemption in exchange for LP Units. As Brookfield Renewable, at its sole discretion, has the right to
settle the obligation with LP Units, the Redeemable/Exchangeable partnership units are classified as
equity of Brookfield Renewable (“Participating non-controlling interests – in a holding subsidiary –
Redeemable/Exchangeable units held by Brookfield”).
limited partnership units
Brookfield Renewable has entered into voting agreements with Brookfield, whereby Brookfield
Renewable gained control of the entities that own certain U.S., Brazil and Europe renewable power
generating operations. These voting agreements provide Brookfield Renewable the authority to direct the
election of the Boards of Directors of the relevant entities, among other things, and therefore provide
Brookfield Renewable with control. Accordingly, Brookfield Renewable consolidates the accounts of these
entities. Refer to Note 11 - Related party transactions for further information.
The voting agreements do not represent business combinations in accordance with IFRS 3, Business
Combinations (“IFRS 3”), as all combining businesses are ultimately controlled by Brookfield Asset
Management both before and after the transactions were completed. Brookfield Renewable accounts for
these transactions involving entities under common control in a manner similar to a pooling of interest
which requires the presentation of pre-voting agreement financial information as if the transactions had
always been in place. Refer to Note 2(o)(ii) - Critical judgments in applying accounting policies - Common
control transactions for Brookfield Renewable’s policy on accounting for transactions under common
control.
Equity-accounted investments and joint ventures
(ii)
Equity-accounted investments are entities over which Brookfield Renewable has significant influence or
joint arrangements representing joint ventures. Significant influence is the ability to participate in the
financial and operating policy decisions of the investee, but it has no control or joint control over those
investees. Such investments are accounted for using the equity method.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities
require unanimous consent of the parties sharing control. Brookfield Renewable accounts for its interests
in joint ventures using the equity method.
Under the equity method, the carrying value of an interest in an investee is initially recognized at cost and
adjusted for Brookfield Renewable’s share of net income, other comprehensive income (“OCI”),
distributions by the equity-accounted investment and other adjustments to Brookfield Renewable’s
proportionate interest in the investee.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 81
(c) Foreign currency translation
All figures reported in the consolidated financial statements and tabular disclosures to the consolidated
financial statements are reflected in millions of U.S. dollars, which is the functional currency of Brookfield
Renewable. Each of the foreign operations included in these consolidated financial statements
determines its own functional currency, and items included in the financial statements of each subsidiary
are measured using that functional currency.
Assets and liabilities of foreign operations having a functional currency other than the U.S. dollar are
translated at the rate of exchange prevailing at the reporting date and revenues and expenses at the rate
of exchange prevailing at the dates of the transactions during the period. Gains or losses on translation of
foreign subsidiaries are included in OCI. Gains or losses on foreign currency denominated balances and
transactions that are designated as hedges of net investments in these operations are reported in the
same manner.
the consolidated
financial statements of Brookfield Renewable,
In preparing
foreign currency
denominated monetary assets and liabilities are translated into the functional currency using the closing
rate at the applicable consolidated balance sheet dates. Non-monetary assets and liabilities,
denominated in a foreign currency and measured at fair value, are translated at the rate of exchange
prevailing at the date when the fair value was determined and non-monetary assets measured at
historical cost are translated at the historical rate. Revenues and expenses are measured in the functional
currency at the rates of exchange prevailing at the dates of the transactions with gains or losses included
in income.
(d) Cash and cash equivalents
Cash and cash equivalents include cash, term deposits and money market instruments with original
maturities of less than 90 days.
(e) Restricted cash
Restricted cash includes cash and cash equivalents, where the availability of funds is restricted primarily
by credit agreements.
(f) Property, plant and equipment and revaluation method
Power generating assets are classified as property, plant and equipment and are accounted for using the
revaluation method under IAS 16, Property, Plant and Equipment (“IAS 16”). Property, plant and
equipment are initially measured at cost and subsequently carried at their revalued amount, being the fair
value at the date of the revaluation, less any subsequent accumulated depreciation and any subsequent
accumulated impairment losses.
Brookfield Renewable generally determines the fair value of its property, plant and equipment by using a
20-year discounted cash flow model. This model incorporates future cash flows from long-term power
purchase agreements that are in place where it is determined that the power purchase agreements are
linked specifically to the related power generating assets. The model also includes estimates of future
electricity prices, anticipated long-term average generation, estimated operating and capital expenditures,
and assumptions about future inflation rates and discount rates by geographical location. Construction
work-in-progress (“CWIP”) is revalued when sufficient information exists to determine fair value using the
discounted cash flow method. Revaluations are made on an annual basis as at December 31 to ensure
that the carrying amount does not differ significantly from fair value. For power generating assets
acquired through business combinations during the year, Brookfield Renewable initially measures the
assets at fair value consistent with the policy described in Note 2(l) – Business combinations.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 82
Accordingly, in the year of acquisition, power generating assets are not revalued at year-end unless there
is an indication that assets are impaired.
Where the carrying amount of an asset increased as a result of a revaluation, the increase is recognized
in income to the extent the increase reverses a previously recognized decrease recorded through income,
with the remainder of the increase recognized in OCI and accumulated in equity under revaluation surplus
and non-controlling interest. Where the carrying amount of an asset decreased, the decrease is
recognized in OCI to the extent that a balance exists in revaluation surplus with respect to the asset, with
the remainder of the decrease recognized in income.
Depreciation on power generating assets is calculated on a straight-line basis over the estimated service
lives of the assets, which are as follows:
Dams
Penstocks
Powerhouses
Hydroelectric generating units
Wind generating units
Gas-fired co-generating units
Other assets
Estimated service lives
Up to 115 years
Up to 60 years
Up to 115 years
Up to 115 years
Up to 30 years
Up to 40 years
Up to 60 years
Costs are allocated to significant components of property, plant and equipment. When items of property,
plant and equipment have different useful lives, they are accounted for as separate items (significant
components) and depreciated separately. To ensure the accuracy of useful lives and residual values, a
review is conducted annually.
Depreciation is calculated based on the cost of the asset less its residual value. Depreciation commences
when the asset is in the location and conditions necessary for it to be capable of operating in the manner
intended by management. It ceases at the earlier of the date the asset is classified as held-for-sale and
the date the asset is derecognized. An item of property, plant and equipment and any significant
component is derecognized upon disposal or when no future economic benefits are expected from its
use. Other assets include equipment, buildings and leasehold improvements. Buildings, furniture and
fixtures, leasehold improvements and office equipment are recorded at historical cost, less accumulated
depreciation. Land and CWIP are not subject to depreciation.
The depreciation of property, plant and equipment in Brazil is based on the duration of the authorization
or the useful life of a concession asset. The weighted-average remaining duration at December 31, 2015
is 18 years (2014: 15 years). Since land rights are part of the concession or authorization, this cost is also
subject to depreciation.
Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount
of the asset, and the net amount is applied to the revalued amount of the asset.
Gains and losses on disposal of an item of property, plant and equipment are recognized in Other income
in the consolidated statements of income (loss). The revaluation surplus is reclassified within the
respective components of equity and not reclassified to net income (loss) when the assets are disposed.
(g) Asset impairment
At each balance sheet date, management assesses whether there is any indication that assets are
impaired. For non-financial tangible and intangible assets (including equity-accounted investments), an
impairment is recognized if the recoverable amount, determined as the greater of the estimated fair value,
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 83
less costs to sell, and the discounted future cash flows generated from use and eventual disposal of an
asset or cash-generating unit, is less than its carrying value. The projections of future cash flows take into
account the relevant operating plans and management’s best estimate of the most probable set of
conditions anticipated to prevail. Should an impairment loss subsequently reverse, the carrying amount of
the asset is increased to the lesser of the revised estimate of the recoverable amount, and the carrying
amount that would have been recorded had no impairment loss been recognized previously.
(h) Trade receivables and other current assets
Trade receivables and other current assets are recognized initially at fair value, and subsequently
measured at amortized cost using the effective interest method, less any allowance for uncollectability.
(i) Financial instruments
All financial instruments are classified into one of the following categories: assets and liabilities at fair
value through profit or loss (“FVTPL”), cash, loans and receivables, financial instruments used for
hedging, and other financial liabilities. All financial instruments are recorded at fair value at recognition.
Subsequent to initial recognition, financial assets classified as loans and receivables, and other financial
liabilities are measured at amortized cost using the effective interest method. Financial assets and
financial liabilities classified as financial instruments used for cash-flow hedging continue to be
recognized at fair value through OCI. Other financial assets and financial liabilities and non-hedging
financial instruments are recorded at fair value through profit and loss.
Brookfield Renewable presents the liability and equity components separately upon recognition of such
financial instruments. The amount of accretion relating to the liability component is recognized in profit or
loss; and the amount of consideration relating to the equity component is recognized in equity.
Brookfield Renewable selectively utilizes derivative financial instruments to manage financial risks,
including interest rate, commodity and foreign exchange risks. A derivative is a financial instrument, which
requires little or no initial investment, settles at a future date, and has a value that changes in response to
the change in a specified variable such as an interest rate, financial instrument price, commodity price,
foreign exchange rate, index of prices or rates, credit rating or credit index. Hedge accounting is applied
when the derivative is designated as a hedge of a specific exposure, and it is highly probable that it will
continue to be effective as a hedge based on an expectation of offsetting cash flows or fair value. Hedge
accounting is discontinued prospectively when the derivative no longer qualifies as a hedge or the
hedging relationship is terminated. Once discontinued, the cumulative change in fair value of a derivative
that was previously recorded in equity by the application of hedge accounting is recognized in income
over the remaining term of the original hedging relationship, unless the originally forecasted transaction is
no longer expected to occur, at which point it is released to income. The fair values of derivative financial
instruments are included in financial instrument assets or financial instrument liabilities, respectively.
Items qualifying as hedges
(i)
Cash flow hedge
The effective portion of unrealized gains and losses on interest rate forward and swap contracts
designated as hedges of future interest rate payments are included in equity as cash flow hedges when
the interest rate risk relates to an anticipated interest payment. The periodic exchanges of payments on
interest rate swap contracts designated as hedges of debt are recorded on an accrual basis as an
adjustment to interest expense. The periodic exchanges of payments on interest rate contracts
designated as hedges of future interest payments are recorded in income over the term of the
corresponding interest payments.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 84
Net investment hedge
Realized and unrealized gains and losses on foreign exchange forward contracts designated as hedges
of currency risks are included in equity when the currency risk relates to a net investment in a subsidiary
with a functional currency other than the U.S. dollar and are included in income in the period in which the
subsidiary is disposed.
Items not qualifying as hedges
(ii)
Upon initial recognition of a derivative financial instrument that is not designated as a hedge, a derivative
asset or liability is recorded with an offsetting deferred liability or asset, respectively. Gains or losses
arising from changes in fair value of the derivative asset or liability are recognized in income through fair
value gains or losses in the period the changes occur. The deferred liability or asset is amortized through
income, on a straight-line basis, over the life of the derivative financial instrument.
(iii) Available-for-sale investments
Investments in publicly quoted equity and debt securities are categorized as available-for-sale when it is
not Brookfield Renewable’s strategic intent to sell the securities and the securities were not acquired
principally for their near-term sale. Available-for-sale equity and debt investments are recorded at fair
value with unrealized gains and losses recorded in OCI. Realized gains and losses are recorded in
income when investments are sold and are calculated using the average carrying amount of securities
sold. If the fair value of an investment declines below the carrying amount, qualitative and quantitative
assessments of whether the impairment is either significant or prolonged is undertaken. All relevant facts
and circumstances in this assessment are undertaken to determine, particularly the length of time and
extent to which fair value has declined below the carrying amount.
(j) Revenue and expense recognition
Revenue from the sale of electricity is recorded when it is delivered. The revenue must be considered
collectible and the costs incurred to provide the electricity to be measurable before recognizing the
related revenue. Costs related to the purchases of power or fuel are recorded upon delivery. All other
costs are recorded as incurred.
(k) Income taxes
Current income tax assets and liabilities are measured at the amount expected to be paid to tax
authorities, net of recoveries, based on the tax rates and laws enacted or substantively enacted at the
balance sheet dates. Current income tax assets and liabilities are included in trade receivables and other
current assets and accounts payable and accrued liabilities, respectively.
Deferred tax is recognized on taxable temporary differences between the tax bases and the carrying
amounts of assets and liabilities. Deferred tax is not recognized if the temporary difference arises from
goodwill or from initial recognition (other than in a business combination) of other assets and liabilities in a
transaction that affects neither taxable profit nor accounting profit. Deferred income tax assets are
recognized for all deductible temporary differences, carry forwards of unused tax credits and unused tax
losses, to the extent that it is probable that deductions, tax credits and tax losses can be utilized. The
carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the
extent it is no longer probable that the income tax assets will be recovered. Deferred income tax assets
and liabilities are measured at the tax rates that are expected to apply to the year when the assets are
realized or the liabilities settled, using the tax rates and laws enacted or substantively enacted at the
balance sheet dates.
Current and deferred income taxes relating to items recognized directly in OCI are also recognized
directly in OCI.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 85
(l) Business combinations
The acquisition of a business is accounted for using the acquisition method. The consideration for an
acquisition is measured at the aggregate of the fair values, at the date of exchange, of the assets
transferred, the liabilities incurred to former owners of the acquired business, and equity instruments
issued by the acquirer in exchange for control of the acquired business. The acquired business’
identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS
3 are recognized at their fair values at the acquisition date, except for income taxes which are measured
in accordance with IAS 12, Income Taxes, share-based payments which are measured in accordance
with IFRS 2, Share-based Payment and non-current assets that are classified as held-for-sale which are
measured at fair value less costs to sell in accordance with IFRS 5. The non-controlling interest in the
acquiree is initially measured at the non-controlling interest’s proportion of the net fair value of the
identifiable assets, liabilities and contingent liabilities recognized.
To the extent that the aggregate of the fair value of consideration paid, the amount of any non-controlling
interest and the fair value of any previously held interest in the acquiree exceeds the fair value of the net
identifiable tangible and intangible assets, goodwill is recognized. To the extent that this difference is
negative, the amount is recognized as a gain in income.
When a business combination is achieved in stages, previously held interests in the acquired entity are
re-measured to fair value at the acquisition date, which is the date control is obtained, and the resulting
gain or loss, if any, is recognized in income. Amounts arising from interests in the acquired business prior
to the acquisition date that have previously been recognized in OCI are reclassified to income. Upon
disposal or loss of control of a subsidiary, the carrying amount of the net assets of the subsidiary
(including any OCI relating to the subsidiary) are derecognized with the difference between any proceeds
received and the carrying amount of the net assets recognized as a gain or loss in income.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a
contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes
in fair values are adjusted against the cost of the acquisition where they qualify as measurement period
adjustments. All other subsequent changes in the fair value of contingent consideration classified as
liabilities will be recognized in the consolidated statements of income (loss), whereas changes in the fair
values of contingent consideration classified within equity are not subsequently re-measured.
(m) Other items
Capitalized costs
(i)
Capitalized costs related to CWIP include all eligible expenditures incurred in connection with the
development and construction of the power generating asset. The expenditures consist of cost of
materials, direct labor and any other costs directly attributable to bringing the asset to a working condition
for its intended use, and the costs of dismantling and removing the items and restoring the site on which
they are located. Interest and borrowings costs are capitalized when activities that are necessary to
prepare the asset for its intended use or sale are in progress, expenditures for the asset have been
incurred and funds have been used or borrowed to fund the construction or development. Capitalization
of costs ceases when the asset is ready for its intended use.
Pension and employee future benefits
(ii)
Pension and employee future benefits are recognized in the consolidated financial statements in respect
of employees of the operating entities within Brookfield Renewable. The costs of retirement benefits for
defined benefit plans and post-employment benefits are recognized as the benefits are earned by
employees. The project unit credit method, using the length of service and management’s best estimate
assumptions, is used to value its pension and other retirement benefits. Assets are valued at fair value for
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 86
purposes of calculating the expected return on plan assets. All actuarial gains and losses are recognized
immediately through OCI in order for the net pension asset or liability recognized in the consolidated
balance sheets to reflect the full value of the plan deficit or surplus. Net interest is calculated by applying
the discount rate to the net defined benefit asset or liability. Changes in the net defined benefit obligation
related to service costs (comprising of current service costs, past services costs, gains and losses on
curtailments and non-routine settlements), and net interest expense or income are recognized in the
consolidated statements of income (loss).
Re-measurements, comprising of actuarial gains or losses, the effect of the asset ceiling, and the return
on plan assets (excluding net interest), are recognized immediately in the consolidated balance sheets
with a corresponding debit or credit to retained earnings through OCI in the period in which they occur.
Re-measurements are not reclassified to profit or loss in subsequent periods. For defined contribution
plans, amounts are expensed based on employee entitlement.
(iii) Decommissioning, restoration and environmental liabilities
Legal and constructive obligations associated with the retirement of property, plant and equipment are
recorded as liabilities when those obligations are incurred and are measured at the present value of the
expected costs to settle the liability, using a discount rate that reflects the current market assessments of
the time value of money and the risks specific to the liability. The liability is accreted up to the date the
liability will be incurred with a corresponding charge to operating expenses. The carrying amount of
decommissioning, restoration and environmental liabilities is reviewed annually with changes in the
estimates of timing or amount of cash flows added to or deducted from the cost of the related asset.
Interest and borrowing costs
(iv)
Interest and borrowing costs are capitalized when such costs are directly attributable to the acquisition,
construction or production of a qualifying asset. A qualifying asset is an asset that takes a substantial
period of time to prepare for its intended use.
(v) Provisions
A provision is a liability of uncertain timing or amount. A provision is recognized if Brookfield Renewable
has a present legal or constructive obligation as a result of past events, it is probable that an outflow of
resources will be required to settle the obligation and the amount can be reliably estimated. Provisions
are not recognized for future operating losses. The provision is measured at the present value of the best
estimate of the expenditures expected to be required to settle the obligation using a discount rate that
reflects the current market assessments of the time value of money and the risks specific to the
obligation. Provisions are re-measured at each balance sheet date using the current discount rate. The
increase in the provision due to the passage of time is recognized as interest expense.
Interest income
(vi)
Interest income is earned with the passage of time and is recorded on an accrual basis.
(vii) Government grants
Brookfield Renewable becomes eligible for government grants by constructing or purchasing renewable
power generating assets, and by bringing those assets to commercial operation, coupled with a
successful application to the applicable program or agency. The assessment of whether or not a project
has complied with the conditions and that there is reasonable assurance the grants will be received will
be undertaken on a case by case basis. Brookfield Renewable reduces the cost of the asset by the
amount of the grant. The grant amounts are recognized in income on a systematic basis as a reduction
of depreciation over the periods, and in the proportions, in which depreciation on those assets is charged.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 87
With respect to grants related to income, the government assistance (in the form of the difference
between market price and guaranteed fixed price) typically becomes payable once electricity is produced
and delivered to the relevant grid. It is at this point that the receipt of the grant becomes reasonably
assured, and therefore the grant is recognized as revenue in the month that delivery of the electricity
occurs.
(n) Critical estimates
Brookfield Renewable makes estimates and assumptions that affect the carrying value of assets and
liabilities, disclosure of contingent assets and liabilities and the reported amount of income and OCI for
the year. Actual results could differ from these estimates. The estimates and assumptions that are critical
to the determination of the amounts reported in the consolidated financial statements relate to the
following:
Property, plant and equipment
(i)
The fair value of Brookfield Renewable’s property, plant and equipment is calculated using estimates and
assumptions about future electricity prices from renewable sources, anticipated long-term average
generation, estimated operating and capital expenditures, future inflation rates and discount rates, as
described in Note 12 - Property, plant and equipment, at fair value. Judgment is involved in determining
the appropriate estimates and assumptions in the valuation of Brookfield Renewable’s property, plant and
equipment. See Note 2(o)(iii) - Critical judgments in applying accounting policies - Property, plant and
equipment for further details.
Estimates of useful lives and residual values are used in determining depreciation and amortization. To
ensure the accuracy of useful lives and residual values, these estimates are reviewed on an annual basis.
Financial instruments
(ii)
Brookfield Renewable makes estimates and assumptions that affect the carrying value of its financial
instruments, including estimates and assumptions about future electricity prices, long-term average
generation, capacity prices, discount rates and the timing of energy delivery. Non-financial instruments
are valued using estimates of future electricity prices which are estimated by considering broker quotes
for the years in which there is a liquid market and, for the subsequent years, Brookfield Renewable’s best
estimate of electricity prices that would allow new entrants into the market. The fair value of interest rate
swaps is the estimated amount that another party would receive or pay to terminate the swap agreements
at the reporting date, taking into account current market interest rates. This valuation technique
approximates the net present value of future cash flows. See Note 9 - Risk management and financial
instruments for more details.
(iii) Deferred income taxes
The consolidated financial statements include estimates and assumptions for determining the future tax
rates applicable to subsidiaries and identifying the temporary differences that relate to each subsidiary.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply during
the year when the assets are realized or the liabilities settled, using the tax rates and laws enacted or
substantively enacted at the consolidated balance sheet dates. Operating plans and forecasts are used to
estimate when the temporary difference will reverse.
(o) Critical judgments in applying accounting policies
The following are the critical judgments that have been made in applying the accounting policies used in
the consolidated financial statements and that have the most significant effect on the amounts in the
consolidated financial statements:
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 88
Preparation of consolidated financial statements
(i)
These consolidated financial statements present the financial position, results of operations and cash
flows of Brookfield Renewable. Judgment is required in determining what assets, liabilities and
transactions are recognized in the consolidated financial statements as pertaining to Brookfield
Renewable’s operations.
(ii) Common control transactions
Common control business combinations specifically fall outside of scope of IFRS 3 and as such
management has used its judgment to determine an appropriate policy to account for these transactions,
considering other relevant accounting guidance that is within the framework of principles in IFRS and that
reflects the economic reality of the transactions, in accordance with IAS 8. As a result, the consolidated
financial statements account for assets and liabilities acquired at the previous carrying value on the
predecessor’s financial statements. Differences between the consideration given and the assets and
liabilities received are recorded directly to equity.
Property, plant and equipment
(iii)
The accounting policy relating to Brookfield Renewable’s property, plant and equipment is described in
Note 2(f) - Property, plant and equipment and revaluation method. In applying this policy, judgment is
used in determining whether certain costs are additions to the carrying amount of the property, plant and
equipment as opposed to repairs and maintenance. If an asset has been developed, judgment is required
to identify the point at which the asset is capable of being used as intended and to identify the directly
attributable costs to be included in the carrying value of the development asset. The useful lives of
property, plant and equipment are determined by independent engineers periodically with an annual
review by management.
Annually, Brookfield Renewable determines the fair value of its property, plant and equipment using a
methodology that it has judged to be reasonable. The methodology is generally a 20-year discounted
cash flow model. Twenty years is the period considered reasonable as Brookfield Renewable has 20-year
capital plans and it believes a reasonable third party would be indifferent between extending the cash
flows further in the model versus using a discounted terminal value.
The valuation model incorporates future cash flows from long-term power purchase agreements that are
in place where it is determined that the power purchase agreements are linked specifically to the related
power generating assets. With respect to estimated future generation that does not incorporate long-term
power purchase agreement pricing, the cash flow model uses estimates of future electricity prices using
broker quotes from independent sources for the years in which there is a liquid market. The valuation of
power generating assets not linked to long-term power purchase agreements also requires the
development of a long-term estimate of future electricity prices. In this regard the valuation model uses a
discount to the all-in cost of construction with a reasonable return, to secure energy from new renewable
on-shore wind development resources as the benchmark that will establish the market price for electricity
for renewable resources.
Brookfield Renewable’s long-term view is anchored to the cost of securing new energy from renewable
sources to meet future demand growth by the year 2023 in North America and Europe. This year is
viewed as the point when generators must build additional capacity to maintain system reliability and
provide an adequate level of reserve generation with the retirement of older coal-fired plants, rising
environmental compliance costs, and increased demand. Brookfield Renewable has estimated a discount
to these new-build wind prices to determine renewable electricity prices for hydroelectric facilities. In
Brazil, the estimate of future electricity prices is based on a similar approach as applied in North America
using a forecast of the all-in cost of hydroelectric and wind development.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 89
Terminal values are included in the valuation of hydroelectric assets in the United States and Canada.
For the hydroelectric assets in Brazil, cash flows have been included based on the duration of the
authorization or useful life of a concession asset without consideration of potential renewal value.
Discount rates are determined each year by considering the current interest rates, average market cost of
capital as well as the price risk and the geographical location of the operational facilities as judged by
management. Inflation rates are also determined by considering the current inflation rates and the
expectations of future rates by economists. Operating costs are based on long-term budgets escalated
for inflation. Each operational facility has a 20-year capital plan that it follows to ensure the maximum life
of its assets is achieved. Foreign exchange rates are forecasted by using the spot rates and the available
forward rates, extrapolated beyond the period available. The inputs described above to the discounted
cash flow model require management to consider facts, trends and plans in making its judgments as to
what derives a reasonable fair value of its property, plant and equipment.
(iv) Financial instruments
The accounting policy relating to Brookfield Renewable’s financial instruments is described in Note 2(i) -
Financial instruments. In applying the policy, judgments are made in applying the criteria set out in IAS
39, Financial Instruments: Recognition and Measurement (“IAS 39”), to record financial instruments at fair
value through profit and loss, and the assessments of the effectiveness of hedging relationships.
(v) Deferred income taxes
The accounting policy relating to Brookfield Renewable’s income taxes is described in Note 2(k) - Income
taxes. In applying this policy, judgments are made in determining the probability of whether deductions,
tax credits and tax losses can be utilized.
(p) Future changes in accounting policies
Financial Instruments
(i)
In July 2014, the IASB issued the final version of IFRS 9, Financial Instruments (“IFRS 9”) which reflects
all phases of the financial instruments project and replaces IAS 39, Financial Instruments: Recognition
and Measurement and all previous versions of IFRS 9. The standard introduces new requirements for
classification and measurement, impairment, and hedge accounting. IFRS 9 is effective for annual
periods beginning on or after January 1, 2018, with early application permitted. Retrospective application
is required, but comparative information is not compulsory. Management is currently evaluating the
impact of IFRS 9 on the consolidated financial statements.
(ii) Amendments to IFRS 10 and IAS 28
The amendments to IFRS 10, Consolidated Financial Statements (“IFRS 10”) and IAS 28, Investments in
Associates and Joint Ventures (2011) (“IAS 28”) address an acknowledged inconsistency between the
requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between
an investor and its associate or joint venture. The main consequence of the amendments is that a full
gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or
not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a
business, even if the assets are housed in a subsidiary. The amendments are effective for transactions
occurring in annual periods beginning on or after January 1, 2017 with earlier application permitted.
Management is currently evaluating the impact of the amendments to IFRS 10 and IAS 28 on the
consolidated financial statements.
(iii) Revenue recognition
IFRS 15, Revenue from Contracts with Customers (“IFRS 15”) was issued by the IASB on May 28, 2014.
IFRS 15 outlines a single comprehensive model to account for revenue arising from contracts with
customers and will replace the majority of existing IFRS requirements on revenue recognition including
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 90
IAS 18, Revenue, IAS 11, Construction Contracts and related interpretations. The core principle of the
standard is to recognize revenue to depict the transfer of goods and services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in exchange for those goods and
services. The standard has prescribed a five-step model to apply the principles. The standard also
specifies how to account for the incremental costs of obtaining a contract and the costs directly related to
fulfilling a contract. IFRS 15 is effective for annual periods beginning on or after January 1, 2018.
Management is currently evaluating the impact of IFRS 15 on the consolidated financial statements.
(iv)
Leases
IFRS 16, Leases (“IFRS 16”) was issued by the IASB on January 13, 2016. IFRS 16 brings most leases
on-balance sheet for lessees under a single model, eliminating the distinction between operating and
finance leases. Lessor accounting remains largely unchanged and the distinction between operating and
finance leases is retained. Under IFRS 16 a lessee recognizes a right-of-use asset and a lease liability.
The right-of-use asset is treated similarly to other non-financial assets and depreciated accordingly, and
the liability accrues interest. The lease liability is initially measured at the present value of the lease
payments payable over the lease term, discounted at the rate implicit in the lease. Lessees are permitted
to make an accounting policy election, by class of underlying asset, to apply a method like IAS 17’s
operating lease accounting and not recognize lease assets and lease liabilities for leases with a lease
term of 12 months or less, and on a lease-by-lease basis, to apply a method similar to current operating
lease accounting to leases for which the underlying asset is of low value. IFRS 16 supersedes IAS 17,
Leases and related interpretations and is effective for periods beginning on or after January 1, 2019, with
earlier adoption permitted if IFRS 15 has also been applied. Management is currently evaluating the
impact of IFRS 16 on the consolidated financial statements.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 91
3. PRINCIPAL SUBSIDIARIES
The following table lists the subsidiaries of Brookfield Renewable which, in the opinion of management,
significantly affects its financial position and results of operations as at December 31, 2015:
Alta Wind VIII LLC(1)
Barra do Braúna Energética S.A.
BIF II Safe Harbor Holdings LLC(1)
BIF II Lux Gen SARL
Black Bear Hydro Partners, LLC(1)
Brookfield BRP Canada Corp.
Brookfield BRP Holdings (Canada) Inc.
Brookfield Energia Comercializadora Ltda
Brookfield Power US Holding America Co.
Brookfield Power Wind Prince LP
Brookfield Smoky Mountain Hydropower LLC(1)
Brookfield White Pine Hydro LLC(1)
Catalyst Old River Hydroelectric Limited Partnership(2)
Comber Wind Limited Partnership
Erie Boulevard Hydropower, L.P.
Garracummer Wind Farm Limited(1)
Geração Biomassa Vista Alegre I S.A.(1)
Gosfield Windfarm Limited
Granite Reliable Power, LLC(1)
Great Lakes Hydro America, LLC
Great Lakes Power Limited
Hawks Nest Hydro LLC
Itiquira Energética S.A.
Knockacummer Wind Farm Limited(1)
Kwagis Power Limited Partnership
Lièvre Power L.P.
Mississagi Power Trust
Powell River Energy Inc.
Rumford Falls Hydro LLC
Safe Harbor Water Power Corporation(1)
Tangará Energia S.A.(1)
Windstar Energy, LLC
(1)
(2)
Voting control held through voting agreements with Brookfield.
Non-voting economic interest held through preferred shares and secured notes.
Jurisdiction of
Incorporation
or Organization
Delaware
Brazil
Delaware
Luxembourg
Delaware
Alberta
Ontario
Brazil
Delaware
Ontario
Delaware
Delaware
Louisiana
Ontario
Delaware
Republic of Ireland
Brazil - Paraná
Ontario
Delaware
Delaware
Ontario
Delaware
Brazil
Republic of Ireland
British Columbia
Québec
Québec
Québec
Delaware
Pennsylvania
Brazil - São Paulo
California
Percentage of
voting securities
owned or controlled
(%)
100
100
100
100
100
100
100
100
100
100
100
100
75
100
100
100
100
100
89.5
100
100
100
100
100
75
100
100
100
100
100
100
100
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 92
4. BUSINESS COMBINATIONS
The following investments were accounted for using the acquisition method, and the results of operations
have been included in the consolidated financial statements since the respective dates of acquisition.
Portugal Wind Portfolio
In February 2015, Brookfield Renewable acquired two wind facilities in Portugal (“Portugal Wind
Portfolio”) with an aggregate capacity of 123 MW, and expected to generate 260 GWh annually.
The acquisition was completed with institutional partners, and Brookfield Renewable retains an
approximate 40% controlling interest. Total consideration of €65 million ($71 million) included cash paid
on closing of €58 million ($63 million), post-closing adjustments, and deferred consideration.
The revenue for the year ended December 31, 2015 is $28 million.
Brazil Portfolio
In November 2014, Brookfield Renewable entered into an agreement to acquire a 488 MW portfolio in
Brazil comprising of hydroelectric, wind and biomass generating capacity (“Brazil Portfolio”). The
acquisitions were completed with institutional partners, and Brookfield Renewable retains an approximate
40% controlling interest, as follows:
•
•
In March 2015, Brookfield Renewable completed the acquisition of a 313 MW operating
renewable power generation portfolio - 43 MW of hydroelectric, 150 MW of wind and 120 MW of
biomass - and a 55 MW biomass development project. The acquisition included R$41 ($13
million) of non-controlling interests. Total consideration of R$1,678 million ($525 million) included
cash paid of R$1,546 million ($484 million) and deferred consideration. In June 2015, the
remaining non-controlling interests were acquired for R$41 million ($13 million).
In May 2015, Brookfield Renewable completed the acquisition of a 120 MW operating
hydroelectric facility. The acquisition included R$9 million ($3 million) of non-controlling
interests. Total consideration of R$189 million ($63 million) included cash paid of R$171 million
($57 million) and deferred consideration of R$18 million ($6 million). In August 2015, the
remaining non-controlling interests were acquired for R$9 million ($3 million).
The total acquisition costs of $2 million were expensed as incurred.
If the acquisition had taken place at the beginning of the year the revenue from the acquisition would
have been $93 million (unaudited) for the year ended December 31, 2015.
Scotland Wind Pipeline
In June 2015, Brookfield Renewable acquired an onshore wind development pipeline in Scotland
(“Scotland Wind Pipeline”) totaling approximately 1,200 MW, including a mix of contracted, permitted and
earlier stage development projects. Total consideration of £55 million ($85 million) included upfront cash
paid of £40 million ($62 million), contingent consideration, and working capital adjustments. The
acquisition costs of $1 million were expensed as incurred. The contingent consideration was recorded at
its fair value of £14 million ($22 million), which represents the present value of a probability-weighted
evaluation of Brookfield Renewable’s obligation to pay up to £63 million ($97 million) related to the build-
out of the development pipeline. The contingent consideration was recognized in the Consolidated
Balance Sheets within the Other long-term liabilities line item.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 93
Voting Agreements
In March 2015, Brookfield Renewable entered into voting agreements with certain Brookfield subsidiaries
(and their managing members) related to Brookfield Infrastructure Fund II (the “BIF II Entities”) which are
co-investors along with a subsidiary of Brookfield Renewable in Brazilian entities (the “FIPs”) which hold
the Brazil Portfolio power generating operations. Pursuant to these voting agreements, the BIF II Entities
agreed to provide Brookfield Renewable, among other things, the authority to direct the election of the
manager of the jointly-owned FIPs.
Preliminary purchase price allocations, at fair values, with respect to the acquisitions are as follows:
(MILLIONS)
Cash and cash equivalents
Restricted cash
Trade receivables and other current assets
Property, plant and equipment, at fair value
Current liabilities
Long-term debt
Other long-term liabilities
Non-controlling interests
Net assets acquired
Brazil Portugal Scotland
Total
$
19 $
- $
- $
16
16
854
(21)
(280)
-
(16)
5
3
209
(19)
(111)
(16)
-
19
21
20
-
1
97
1,160
(1)
-
(12)
-
(41)
(391)
(28)
(16)
$
588 $
71 $
85 $
744
The estimated fair values of the assets acquired and liabilities assumed in the current year are expected
to be finalized within 12 months of the acquisition date.
Completed During 2014
Maine Hydroelectric Generation Portfolio
In January 2014, Brookfield Renewable acquired a 70 MW portfolio of hydroelectric facilities that are
expected to generate 372 GWh annually (“Maine Hydro”). The acquisition was completed with institutional
partners, and Brookfield Renewable retains an approximate 40% controlling interest in the portfolio. Total
cash consideration was $244 million. The acquisition costs of $2 million were expensed as incurred.
If the acquisition had taken place at the beginning of the year the revenue from the acquisition would
have been $21 million (unaudited) for the year ended December 31, 2014.
California Hydroelectric Generation Facility
In February 2014, Brookfield Renewable acquired the remaining 50% interest in a 30 MW hydroelectric
facility in California (the “California Hydro Step Acquisition”). The total cash consideration was $11 million.
The acquisition was completed with institutional partners, and Brookfield Renewable retains an
approximate 22% controlling interest in the facility.
If the acquisition had taken place at the beginning of the year the revenue from the acquisition would
have been $1 million (unaudited) for the year ended December 31, 2014.
Pennsylvania Hydroelectric Generation Facility
In March 2014, Brookfield Renewable acquired a 33% economic and 50% voting interest in a 417 MW
hydroelectric facility in Pennsylvania (“Pennsylvania Hydro”) which is expected to generate 1,129 GWh
annually. Total cash consideration was $295 million. Brookfield Renewable accounted for its acquired
33% economic interest using the equity method.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 94
In August 2014, Brookfield Renewable acquired the remaining 67% economic and 50% voting interest in
Pennsylvania Hydro (the “Pennsylvania Hydro Step Acquisition”) for additional cash consideration of $614
million, and began consolidating the operating results, cash flows and net assets of Pennsylvania Hydro.
Prior to the Pennsylvania Hydro Step Acquisition, Brookfield Renewable re-measured its previously held
33% economic interest to fair value, and the net impact of this re-measurement was not material. The
Pennsylvania Hydro Step Acquisition was completed with institutional partners, and Brookfield
Renewable retains an approximate 40% controlling interest. Total acquisition costs of $2 million relating
to both the Pennsylvania Hydro and Pennsylvania Hydro Step Acquisition were expensed as incurred.
If the acquisition had taken place at the beginning of the year the additional revenue from the acquisition
would have been $99 million (unaudited) for the year ended December 31, 2014.
Ireland Wind Portfolio
In June 2014, Brookfield Renewable acquired the wind portfolio of Bord Gáis Energy comprising 326 MW
of operating wind capacity across 17 wind projects in Ireland which is expected to generate 837 GWh
annually. The acquisition was completed with institutional partners, and Brookfield Renewable retains an
approximate 40% controlling interest. Total consideration of €524 million ($718 million) included €521
million ($713 million) in cash increased for post-closing adjustments. The acquisition costs of $12 million
were expensed as incurred.
If the acquisition had taken place at the beginning of the year the revenue from the acquisition would
have been $92 million (unaudited) for the year ended December 31, 2014.
Purchase price allocations, at fair values, with respect to the acquisitions were as follows:
(MILLIONS)
Cash and cash equivalents
Restricted cash
Trade receivables and other current assets
Property, plant and equipment, at fair value
Other long-term assets
Current liabilities
Long-term debt
Other long-term liabilities
Net assets acquired
Completed During 2013
Maine California Pennsylvania
Ireland
Total
$
7 $
4 $
15 $
35 $
-
13
220
6
(1)
-
(1)
61
12
34
-
-
-
11
12
10
81
1,040
1,075
2,416
-
-
(13)
(5)
-
(4)
(77)
(76)
-
(75)
(232)
(107)
6
(80)
(322)
(189)
$
244 $
67 $
909 $
718 $ 1,938
Northeastern United States Hydroelectric Generation Portfolio
In March 2013, Brookfield Renewable acquired a 100% interest in a 360 MW portfolio of hydroelectric
facilities. Total consideration was paid as follows: $57 million that included $55 million in cash and $2
million related to the pre-closing payments and working capital adjustments; holding and project level
notes, with a face value of $700 million, were also assumed. The acquisition costs of $8 million were
expensed as incurred. In September 2013, upon the closing of a private fund sponsored by Brookfield
Asset Management, institutional partners co-invested 49.9% in these facilities for $205 million.
If the acquisition had taken place at the beginning of the year the revenue from the acquisition would
have been $104 million (unaudited) for the year ended December 31, 2013.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 95
California Wind Generation Portfolio
In August 2012, Brookfield Renewable acquired 16% of the outstanding common shares of Western Wind
Energy Corp. (“Western Wind”) for a total cash consideration of $25 million.
On November 26, 2012, Brookfield Renewable launched an offer to purchase, through an indirect wholly-
owned subsidiary, all of the issued and outstanding common shares of Western Wind (excluding those
Brookfield Renewable already owns) for C$2.50 in cash per common share. This offer was subsequently
increased to C$2.60 per common share. On February 21, 2013, Brookfield Renewable announced that it
was successful in its bid for Western Wind and following take up of the tendered shares, would own
66.1% of the issued and outstanding common shares.
On March 1, 2013, the Board of Directors were replaced by directors appointed by Brookfield Renewable
and, as a result Brookfield Renewable began consolidating the operating results, cash flows and net
assets of Western Wind. Further, Brookfield Renewable was required to re-measure its previously held
16% interest to fair value, and the net impact of this re-measurement was not material.
On March 7, 2013, Brookfield Renewable increased its ownership to 93% of the outstanding common
shares for additional cash consideration of $143 million. As Brookfield Renewable held more than 90% of
the common shares, on May 21, 2013, it acquired all of the remaining common shares on the same terms
that the common shares were acquired under the offer, for additional cash consideration of $15 million.
The common shares of Western Wind were delisted from the TSX Venture Exchange on May 24, 2013.
If the acquisition had taken place at the beginning of the year the revenue from the acquisition would
have been $38 million (unaudited) for the year ended December 31, 2013.
Canadian Hydroelectric Generation Facility
In March 2013, Brookfield Renewable acquired the remaining 50% interest, previously held by its partner,
in a hydroelectric facility in Canada taking its total investment to 100% (the “Canadian Hydro Step
Acquisition”).
The Canadian Hydro Step Acquisition included cash consideration of $32 million and the assumption of
the partner’s portion of the non-recourse debt. Prior to the Canadian Hydro Step Acquisition, Brookfield
Renewable’s financial interest amounted to $22 million. Brookfield Renewable re-measured its previously
held 50% interest to fair value and reversed any amounts previously recorded in OCI. In addition, $30
million related to revaluation surplus on the initial 50% interest was reclassified within equity of which $14
million related to limited partners’ equity.
If the acquisition had taken place at the beginning of the year the revenue would have been $22 million
(unaudited) for the year ended December 31, 2013.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 96
Purchase price allocations, at fair values, with respect to the acquisitions were as follows:
(MILLIONS)
Cash and cash equivalents
Restricted cash
Other current assets
Property, plant and equipment, at fair value
Other long-term assets
Current liabilities
Long-term debt
Other long-term liabilities
Non-controlling interests
Net assets acquired
Northeastern
United States
California
Canada
$
- $
32
12
721
22
(10)
(720)
-
-
2
8
9
453
30
(23)
(250)
(43)
(68)
$
6
$
-
9
213
-
(29)
(105)
(39)
-
$
57
$
118
$
55
$
Total
8
40
30
1,387
52
(62)
(1,075)
(82)
(68)
230
During the years ended December 31, 2015 and 2014, the purchase price allocations for the acquisitions
in 2014 and 2013, respectively, were finalized. No material changes to the provisional purchase price
allocations disclosed in the audited consolidated financial statements for 2014 and 2013 had to be
considered for acquisitions made in the respective years.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 97
5. DISPOSAL OF ASSETS
In July 2015, Brookfield Renewable, along with its institutional partners, sold its interest in a 102 MW wind
facility in California to a third party for gross cash consideration of $143 million, inclusive of working
capital adjustments of $7 million. The resulting gain on disposition of $53 million, net of $4 million of
transaction costs, was recognized in the Consolidated Statements of Income (Loss) within the Other
income line item. Brookfield Renewable’s interest was approximately 22%.
As a result of the disposition, the accumulated revaluation surplus of $4 million post-tax was reclassified
from other comprehensive income directly to equity. Further, other comprehensive income of $3 million
post-tax on financial instruments designated as cash flow hedges was reclassified to the Consolidated
Statements of Income (Loss) within the Other line item. Deferred income taxes associated with the
disposal were $5 million.
Summarized financial information relating to the disposal of the facility is shown below:
(MILLIONS)
Net proceeds, including working capital adjustments and less transaction costs
Carrying value
Assets
Liabilities
Gain on disposal
6. CASH AND CASH EQUIVALENTS
Brookfield Renewable’s cash and cash equivalents as at December 31 are as follows:
July 2, 2015
$
139
238
(152)
86
$
53
(MILLIONS)
Cash
Short-term deposits
2015
60
3
63
$
$
2014
128
22
150
$
$
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 98
7. RESTRICTED CASH
Brookfield Renewable’s restricted cash as at December 31 is as follows:
(MILLIONS)
Development projects
Operations
Total
Less: non-current
Current
2015
43
293
336
(138)
198
$
$
2014
75
238
313
(81)
232
$
$
Refer to Note 13 – Other long-term assets for information on long-term restricted cash.
8. TRADE RECEIVABLES AND OTHER CURRENT ASSETS
Brookfield Renewable’s trade receivables and other current assets as at December 31 are as follows:
(MILLIONS)
Trade receivables
Other short-term receivables
Prepaids and others
2015
98
87
71
256
$
$
2014
91
40
70
201
$
$
As at December 31, 2015, 99% (2014: 99%) of trade receivables were current. Trade receivables are
generally on 30-day terms and credit limits are assigned and monitored for all counterparties. In
determining the recoverability of trade receivables, management performs a risk analysis considering the
type and age of the outstanding receivables and the credit worthiness of the counterparties.
Management also reviews trade receivable balances on an ongoing basis. Bad debt expense related to
trade receivables is recognized at the time an account is deemed uncollectible. Accordingly, as at
December 31, 2015 and 2014 an allowance for doubtful accounts was not deemed necessary.
9. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
RISK MANAGEMENT
Brookfield Renewable’s activities expose it to a variety of financial risks, including market risk (i.e.,
commodity price risk, interest rate risk, and foreign currency risk), credit risk and liquidity risk. Brookfield
Renewable uses financial instruments primarily to manage these risks.
(a) Market risk
Market risk is defined for these purposes as the risk that the fair value or future cash flows of a financial
instrument held by Brookfield Renewable will fluctuate because of changes in market prices.
Brookfield Renewable faces market risk from foreign currency assets and liabilities, the impact of changes
in interest rates, and floating rate liabilities. Market risk is managed by funding assets with financial
liabilities in the same currency and with similar interest rate characteristics and holding financial contracts,
such as interest rate swaps and foreign exchange contracts, to minimize residual exposures. Financial
instruments held by Brookfield Renewable that are subject to market risk include borrowings and financial
instruments, such as interest rate, currency and commodity contracts. The categories of financial
instruments that can give rise to significant variability are described below:
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 99
(i) Electricity price risk
Electricity price risk is defined for these purposes as the risk that the fair value or future cash flows of a
financial instrument held by Brookfield Renewable will fluctuate because of changes in electricity prices.
Electricity price risk arises from the sale of Brookfield Renewable’s uncontracted generation. Brookfield
Renewable aims to sell electricity under long-term contracts to secure stable prices and mitigate its
exposure to wholesale markets.
The table below summarizes the impact of changes in the market price of electricity as at December 31.
The impact is expressed in terms of the effect on net income and OCI. The sensitivities are based on the
assumption that the market price changes by five percent with all other variables held constant.
Impact of a 5% change in the market price of electricity, on outstanding energy derivative contracts, for
the year ended December 31:
(MILLIONS)
5% increase
5% decrease
(ii) Foreign currency risk
Effect on net income
Effect on OCI
2015
2014
2013
2015
2014
2013
$
(2) $
(1) $
(1) $
(7) $
(9) $
2
1
1
7
9
1
(1)
Foreign currency risk is defined for these purposes as the risk that the fair value of a financial instrument
held by Brookfield Renewable will fluctuate because of changes in foreign currency rates.
Brookfield Renewable has exposure to the Canadian dollar, Brazil real and Euro through its investments
in foreign operations. Consequently, fluctuations in the U.S. dollar exchange rate against these currencies
increase the volatility of net income and other comprehensive income. Brookfield Renewable holds
foreign currency contracts primarily to mitigate this exposure.
The table below summarizes the impact of changes in the exchange rate as at December 31. The impact
is expressed in terms of the effect on income and OCI. The sensitivities are based on the assumption that
the currency exchange rate changes by five percent with all other variables held constant.
Impact of a 5% change in U.S. dollar exchange rates, on outstanding foreign exchange swaps, for the
year ended December 31:
(MILLIONS)
5% increase
5% decrease
(iii) Interest rate risk
Effect on net income
Effect on OCI
2015
2014
2013
2015
2014
2013
$
2 $
12 $
- $
10 $
19 $
(2)
(12)
-
(10)
(19)
-
-
Interest rate risk is defined for these purposes as the risk that the fair value or future cash flows of a
financial instrument held by Brookfield Renewable will fluctuate, because of changes in interest rates.
Brookfield Renewable’s assets largely consist of long duration physical assets. Brookfield Renewable’s
financial liabilities consist primarily of long-term fixed rate debt or floating-rate debt that has been
swapped to fixed rates with interest rate financial instruments. All non-derivative financial liabilities are
recorded at their amortized cost. Brookfield Renewable also holds interest rate contracts to lock-in fixed
rates on certain anticipated future debt issuances.
Brookfield Renewable will enter into interest rate swaps designed to minimize the exposure to interest
rate fluctuations on its variable rate debt. Fluctuations in interest rates could impact Brookfield
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 100
Renewable’s cash flows, primarily with respect to the interest payable against Brookfield Renewable’s
variable rate debt, which is limited to certain subsidiary borrowings with a total principal value of $2,532
million (2014: $2,552 million). Of this principal value, $1,040 million (2014: $1,237 million) has been
hedged through the use of interest rate swaps. The fair values of the recognized liability for the interest
rate swaps were calculated using a valuation model with observable interest rates.
The table below summarizes the impact of changes in the interest rate as at December 31. The impact is
expressed in terms of the effect on income and OCI. The sensitivities are based on the assumption that
the interest rate changes by one percent with all other variables held constant.
Impact of a 1% change in interest rates, on outstanding interest rate swaps and variable rate debt, for the
year ended December 31:
(MILLIONS)
1% increase
1% decrease
(b) Credit risk
Effect on net income
Effect on OCI
2015
2014
2013
2015
2014
$
(15) $
(13) $
(7) $
125 $
138 $
15
13
7
(125)
(138)
2013
96
(96)
Credit risk is the risk of loss due to the failure of a borrower or counterparty to fulfill its contractual
obligations. Brookfield Renewable’s exposure to credit risk in respect of financial instruments relates
primarily to counterparty obligations regarding energy contracts, interest rate swaps, forward foreign
exchange contracts and physical electricity and gas transactions.
Brookfield Renewable minimizes credit risk with counterparties through the selection, monitoring and
diversification of counterparties, and the use of standard trading contracts, and other credit risk mitigation
techniques. In addition, Brookfield Renewable’s power purchase agreements are reviewed regularly and
are almost exclusively with customers having long standing credit histories or investment grade ratings,
which limit the risk of non-collection. See Note 8 - Trade receivables and other current assets, for
additional details regarding Brookfield Renewable’s trade receivables balance.
The maximum credit exposure at December 31 was as follows:
(MILLIONS)
Cash and cash equivalents
Restricted cash(1)
Trade receivables and other short-term receivables
Financial instrument assets
Due from related parties
(1)
Includes both the current and long-term amounts.
(c) Liquidity risk
$
2015
63
336
185
32
57
$
2014
150
313
131
66
63
$
673
$
723
Liquidity risk is the risk that Brookfield Renewable cannot meet a demand for cash or fund an obligation
when due. Liquidity risk is mitigated by Brookfield Renewable’s cash and cash equivalent balances and
its access to undrawn credit facilities. Details of the available portion of credit facilities are included in
Note 15 – Long-term debt and credit facilities. Brookfield Renewable also ensures that it has access to
public capital markets and maintains a strong investment grade credit rating of BBB (high).
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 101
Brookfield Renewable is also subject to the risk associated with debt financing. This risk is mitigated by
the long-term duration of debt instruments and the diversification in maturity dates over an extended
period of time.
The sensitivity analysis discussed above reflects the risks associated with instruments that Brookfield
Renewable considers are market sensitive and the potential loss resulting from one or more selected
hypothetical changes. Therefore, the discussion above is not intended to reflect fully Brookfield
Renewable’s risk exposure.
CASH OBLIGATIONS
The table below classifies the cash obligations related to Brookfield Renewable’s liabilities into relevant
maturity groupings based on the remaining period from the balance sheet dates to the contractual
maturity date. As the amounts are the contractual undiscounted cash flows (gross of unamortized
financing fees and accumulated amortization, where applicable), they may not agree with the amounts
disclosed in the consolidated balance sheets.
AS AT DECEMBER 31, 2015
(MILLIONS)
Accounts payable and accrued liabilities
Financial instrument liabilities(1)
Due to related parties
Other long-term liabilities - concession payments
Long-term debt and credit facilities(1)
Interest payable on long-term debt(2)
Total
AS AT DECEMBER 31, 2014
(MILLIONS)
Accounts payable and accrued liabilities
Financial instrument liabilities(1)
Due to related parties
Other long-term liabilities - concession payments
Long-term debt and credit facilities(1)
Interest payable on long-term debt(2)
Total
(1)
(2)
< 1 year 2-5 years
> 5 years
$
284 $
- $
- $
60
-
2
4
-
9
3,136
1,121
3,488
1,170
7,393
2,666
$
1,620 $
4,319 $
4,671 $ 10,610
< 1 year 2-5 years
> 5 years
$
253 $
- $
- $
Total
284
191
64
12
Total
253
174
79
19
68
-
5
7
-
13
3,339
1,287
4,146
1,468
7,741
3,147
127
64
1
769
375
99
79
1
256
392
Includes both the current and long-term amounts.
Represents aggregate interest payable expected to be paid over the entire term of the obligations, if held to maturity. Variable
rate interest payments have been calculated based on estimated interest rates.
$
1,080 $
4,699 $
5,634 $ 11,413
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 102
Brookfield Renewable classifies its assets and liabilities as outlined below:
AS AT DECEMBER 31, 2015
(MILLIONS)
Cash and cash equivalents
Restricted cash
Trade and other receivables(2)
Other current assets
Due from related parties(2)
Financial instrument assets(3)
Equity-accounted investments
Property, plant and equipment, at fair value
Deferred income tax assets
Other long-term assets
$
$
Total assets
Accounts payable and accrued liabilities(2)
Financial instrument liabilities(3)
Due to related parties(2)
Long-term debt and credit facilities(2)(3)
Deferred income tax liabilities
Other long-term liabilities
Cash, loans
and
Assets
receivables (liabilities)(1)
$
63 $
198
-
185
- $
-
-
-
Derivatives
used for
hedging
Other
financial
liabilities
Non-financial
assets and
non-financial
liabilities
- $
-
-
-
- $
-
-
-
-
57
-
-
-
-
-
-
1
-
-
-
138
14
-
-
31
-
-
-
-
-
-
-
-
-
-
-
- $
-
-
-
71
-
-
Total
63
198
185
71
57
32
197
197
18,358
18,358
157
37
157
189
641 $
15 $
31 $
- $ 18,820 $ 19,507
- $
- $
- $ 284 $
-
-
-
-
-
-
-
-
-
-
191
-
-
64
-
7,338
- $
-
-
-
284
191
64
7,338
-
-
-
2,695
2,695
172
-
172
$
- $
- $
191 $ 7,858 $ 2,695 $ 10,744
Total liabilities
(1)
(2)
(3)
Measured at fair value with all gains and losses recorded in the consolidated statement of income.
Measured at fair value at inception and subsequently recorded at amortized cost using the effective interest rate method.
Includes both the current and long-term amounts.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 103
AS AT DECEMBER 31, 2014
(MILLIONS)
Cash and cash equivalents
Restricted cash
Trade and other receivables(2)
Other current assets
Due from related parties(2)
Financial instrument assets(3)
Equity-accounted investments
Property, plant and equipment, at fair value
Deferred income tax assets
Other long-term assets
$
$
Total assets
Accounts payable and accrued liabilities(2)
Financial instrument liabilities(3)
Due to related parties(2)
Long-term debt and credit facilities(2)(3)
Deferred income tax liabilities
Other long-term liabilities
Cash, loans
and
Assets
receivables (liabilities)(1)
$
150 $
- $
Derivatives
used for
hedging
Other
financial
liabilities
Non-financial
assets and
non-financial
liabilities
232
131
63
-
-
-
-
-
-
-
14
-
-
-
92
31
- $
-
-
-
52
-
-
-
-
- $
-
-
-
-
-
-
-
-
- $
-
-
70
-
-
Total
150
232
131
70
63
66
273
273
18,566
18,566
142
33
142
156
668 $
45 $
52 $
- $ 19,084 $ 19,849
- $
- $
- $ 253 $
-
-
-
-
-
-
-
-
-
-
174
-
-
79
- 7,678
- $
-
-
-
253
174
79
7,678
-
-
-
2,637
2,637
147
-
147
Total liabilities
(1)
(2)
(3)
$
Measured at fair value with all gains and losses recorded in the consolidated statement of income (loss).
Measured at fair value at inception and subsequently recorded at amortized cost using the effective interest rate method.
Includes both the current and long-term amounts.
174 $ 8,157 $ 2,637 $ 10,968
- $
- $
Fair value disclosures
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
Fair values determined using valuation models require the use of assumptions concerning the amount
and timing of estimated future cash flows and discount rates. In determining those assumptions,
management looks primarily to external readily observable market inputs such as interest rate yield
curves, currency rates, and price, as applicable. The fair value of interest rate swap contracts, which form
part of financing arrangements, is calculated by way of discounted cash flows, using market interest rates
and applicable credit spreads.
A fair value measurement of a non-financial asset is the consideration that would be received in an
orderly transaction between market participants, considering the highest and best use of the asset.
Assets and liabilities measured at fair value are categorized into one of three hierarchy levels, described
below. Each level is based on the transparency of the inputs used to measure the fair values of assets
and liabilities.
Level 1 – inputs are based on unadjusted quoted prices in active markets for identical assets and
liabilities;
Level 2 – inputs, other than quoted prices in Level 1, that are observable for the asset or liability, either
directly or indirectly; and
Level 3 – inputs for the asset or liability that are not based on observable market data.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 104
The following table presents Brookfield Renewable’s assets and liabilities measured and disclosed at fair
value classified by the fair value hierarchy as at December 31:
(MILLIONS)
Assets measured at fair value:
Cash and cash equivalents
Restricted cash(1)
Financial instrument assets(1)
Energy derivative contracts
Foreign exchange swaps
Available-for-sale investments(2)
Property, plant and equipment
Liabilities measured at fair value:
Financial instrument liabilities(1)
Energy derivative contracts
Interest rate swaps
Foreign exchange swaps
Level 1
Level 2
Level 3
2015
2014
$
63 $
336
- $
-
-
-
14
-
-
-
-
31
1
-
-
(1)
(178)
(12)
- $
63 $
-
-
-
-
336
31
1
14
150
313
31
35
31
18,358
18,358
18,566
-
-
-
(1)
(178)
(12)
(32)
(7,892)
-
(170)
(4)
(23)
(8,434)
Contingent consideration
Liabilities for which fair value is disclosed:
Long-term debt and credit facilities(1)
Total
(1)
(2) Available-for-sale investments represent investment in securities (See Note 13 - Other long-term assets).
Includes both the current and long-term amounts.
(7,892)
(32)
-
-
-
-
$ 413 $ (8,051) $ 18,326 $ 10,688 $ 10,495
There were no transfers between levels during the year ended December 31, 2015.
Financial instruments disclosures
The aggregate amount of Brookfield Renewable’s net financial instrument positions as at December 31
are as follows:
(MILLIONS)
Energy derivative contracts
Interest rate swaps
Foreign exchange swaps
Total
Less: current portion
Long-term portion
2015
2014
Net (Assets) Net (Assets)
Assets
Liabilities
Liabilities
Liabilities
$
31 $
1 $
-
1
32
26
178
12
191
127
$
(30)
178
11
159
101
$
6 $
64 $
58
$
(31)
170
(31)
108
51
57
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 105
The following table presents the change in Brookfield Renewable’s total net financial instrument liability
position as at and for the year ended December 31:
(MILLIONS)
Balance, beginning of year
Note
2015
2014
2013
$ 108 $
56 $ 145
Increases (decreases) in the net financial instrument liability position:
Unrealized (gain) loss through income on energy derivative contracts
(a)
(2)
3
(18)
Unrealized loss (gain) through OCI on energy derivative
contracts
Unrealized (gain) through income on interest rate swaps
Unrealized loss (gain) through OCI on interest rate swaps
Unrealized loss (gain) through income on foreign exchange swaps
Unrealized (gain) through OCI on foreign exchange swaps
Acquisitions, settlements and other
Balance, end of year
Derivative liabilities designated as hedging instruments:
Energy derivative contracts
Interest rate swaps
Foreign exchange swaps
Net positions
Derivative assets not designated as hedging instruments:
Foreign exchange swaps
Net positions
Derivative assets designated as hedging instruments:
Energy derivative contracts
Interest rate swaps
Foreign exchange swaps
Net positions
Total net positions
(a) Energy derivative contracts
(a)
(b)
(b)
(c)
(c)
3
(2)
20
13
(57)
76
(37)
-
93
(13)
(65)
71
$ 159 $ 108 $
7
(19)
(65)
-
-
6
56
(a) $
1 $
- $
(b)
(c)
178
12
170
4
3
68
-
$ 191 $ 174 $
71
(c) $
(1) $
(14) $
$
(1) $
(14) $
-
-
(a) $
(31) $
(31) $
-
(b)
(c)
-
-
-
(15)
(21)
-
$
(31) $
(52) $
(15)
$ 159 $ 108 $
56
Brookfield Renewable has entered into long-term energy derivative contracts primarily to stabilize or
eliminate the price risk on the sale of certain future power generation. Certain energy contracts are
recorded in Brookfield Renewable’s consolidated financial statements at an amount equal to fair value,
using quoted market prices or, in their absence, a valuation model using both internal and third-party
evidence and forecasts.
For the year ended December 31, 2015, gains of $32 million relating to energy derivative contracts were
realized and reclassified from OCI to net income (loss) (2014: $4 million and 2013: $nil).
Based on market prices as of December 31, 2015, unrealized gains of $25 million (2014: $18 million gain
and 2013: $3 million loss) recorded in accumulated other comprehensive income (“AOCI”) on energy
derivative contracts are expected to be settled or reclassified into income in the next twelve months. The
actual amount reclassified from AOCI, however, could vary due to future changes in market prices.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 106
(b) Interest rate swaps
Brookfield Renewable has entered into interest rate swap contracts primarily to minimize exposure to
interest rate fluctuations on its variable rate debt or to lock in interest rates on future debt refinancing. All
interest rate swap contracts are recorded in the consolidated financial statements at an amount equal to
fair value.
At December 31, 2015, agreements with a total notional value of $2,002 million were outstanding (2014:
$2,119 million) including notional values of $nil (2014: $9 million) associated with agreements that are not
formally designated as hedging instruments. The fixed interest rates resulting from these agreements
range from 0.51% to 5.88% (2014: 0.38% to 5.54%).
For the year ended December 31, 2015, net movements relating to cash flow hedges realized and
reclassified from OCI to net income (loss) were $nil (2014: $4 million loss and 2013: $1 million loss).
Based on market prices as of December 31, 2015, unrealized losses of $114 million (2014: $95 million
loss and 2013: $59 million loss) recorded in AOCI on interest rate swaps are expected to be settled or
reclassified into income in the next twelve months. The actual amount reclassified from AOCI, however,
could vary due to future changes in market rates.
(c) Foreign exchange swaps
Brookfield Renewable has entered into foreign exchange swaps to minimize its exposure to currency
fluctuations impacting its investments and earnings in foreign operations, and to fix the exchange rate on
certain anticipated transactions denominated in foreign currencies.
At December 31, 2015, agreements with a total notional value of $442 million were outstanding (2014:
$656 million) including $36 million (2014: $254 million) associated with agreements that are not formally
designated as hedging instruments.
Based on market prices as of December 31, 2015, unrealized losses of $12 million (2014: $26 million
gains and 2013: $nil) recorded in AOCI on foreign exchange swaps are expected to be settled or
reclassified into income in the next twelve months. The actual amount reclassified from AOCI, however,
could vary due to future changes in market rates.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 107
10. RELATED PARTY TRANSACTIONS
Brookfield Renewable’s related party transactions are recorded at the exchange amount. Brookfield
Renewable’s related party transactions are primarily with Brookfield Asset Management and its
subsidiaries. Brookfield Renewable and Brookfield had entered into, or amended, the following material
agreements:
Principal Agreements
Limited Partnership Agreements
Each of the amended and restated limited partnership agreements of Brookfield Renewable and BRELP
outline the key terms of the partnerships, including provisions relating to management, protections for
limited partners, capital contributions, distributions and allocation of income and losses. BRELP’s general
partner is entitled to receive incentive distributions from BRELP as a result of its ownership of the general
partnership interest in BRELP. The incentive distributions are to be calculated in increments based on the
amount by which quarterly distributions on the limited partnership units of BRELP exceed specified target
levels as set forth in the amended and restated partnership agreement.
Master Services Agreement
Brookfield Renewable entered into an agreement with Brookfield Asset Management pursuant to which
Brookfield Asset Management has agreed to provide oversight of the business and provide the services
of senior officers to Brookfield Renewable for a management service fee. The fee is paid on a quarterly
basis and has a fixed quarterly component of $5 million and a variable component calculated as a
percentage of the increase in the total capitalization value of Brookfield Renewable over an initial
reference value (subject to an annual escalation by a specified inflation factor beginning on January 1,
2013). Total capitalization value as of December 31, 2015 is $10 billion, which against the initial reference
value of $8 billion and factoring in the annual amount of $21 million (as adjusted for inflation), resulted in
a management service fee payment for the year ended December 31, 2015 of $48 million (2014: $51
million, 2013: $41 million).
BRELP Voting Agreement
In 2011, we entered into a voting agreement with Brookfield pursuant to which Brookfield Renewable,
through BRPL, has a number of voting rights, including the right to direct all eligible votes in the election
of the directors of BRELP’s general partner.
Revenue Agreements
Contract Amendments
In 2011, two long-term power purchase agreements associated with the generating assets in Ontario held
by Great Lakes Power Limited (“GLPL”) and Mississagi Power Trust (“MPT”), were amended.
The amended GLPL power purchase agreement requires Brookfield to support the price that GLPL
receives for energy generated by certain facilities in Canada at a price of C$82 per MWh subject to an
annual adjustment equal to 40% of the Consumer Price Index (“CPI”) in the previous year. The GLPL
agreement has an initial term to 2029, and the contract automatically renews for successive 20-year
periods with certain termination provisions. If the contract is not terminated prior to 2029, the price under
this agreement reverts back to the original C$68 per MWh subject to an annual adjustment equal to 40%
of the CPI for each year.
The amended MPT power purchase agreement requires Brookfield to purchase the energy generated at
a price of C$103 per MWh subject to an annual adjustment equal to 20% of the CPI in the previous year.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 108
The MPT contract terminates on December 1, 2029 and MPT has been granted the unilateral option to
terminate the agreement, on 120 days written notice, at certain times between 2017 and 2024.
Energy Revenue Agreement
In 2011, an agreement was entered into between Brookfield and Brookfield Power U.S. Holdings America
Co. (“BPUSHA”) that indirectly owns substantially all of the U.S. facilities of Brookfield Renewable.
Brookfield will support the price that BPUSHA receives for energy generated by certain facilities in the
United States at a price $75 per MWh. This price is to be increased annually on January 1 by an amount
equal to 40% of the increase in the CPI during the previous calendar year, but not exceeding an increase
of 3% in any calendar year. This agreement will have an initial term of 20 years, with automatic renewals
for successive 20-year periods with certain termination provisions.
Other Revenue Agreements
Pursuant to a 20-year power purchase agreement, Brookfield purchases all energy from several power
facilities in Maine and New Hampshire held by Great Lakes Holding America (“GLHA”) at $37 per MWh.
The energy rates are subject to an annual adjustment equal to 20% of the increase in the CPI during the
previous year.
Pursuant to a 20-year power purchase agreement, Brookfield purchases all energy from Lievre Power in
Quebec at C$68 per MWh. The energy rates are subject to an annual adjustment equal to the lesser of
40% of the increase in the CPI during the previous calendar year or 3%.
Pursuant to a power guarantee agreement, Brookfield will purchase all energy from the two facilities of
Hydro Pontiac Inc. at a price of C$68 per MWh, to be increased annually each calendar year beginning in
2010 by an amount equal to 40% of the increase in the CPI during the previous calendar year. This
power guarantee agreement is scheduled to commence in 2019 for one facility and in 2020 for the other,
upon the expiration of existing power agreements. This agreement has an initial term to 2029 and
automatically renews for successive 20-year period with certain termination provisions.
Pursuant to a 10-year Wind Levelization agreement expiring in 2019, Brookfield mitigates any potential
wind variation from the expected annual generation of 506 GWh with regards to the Prince Wind assets in
Ontario. Any excess generation compared to the expected generation results in a payment from
Brookfield Renewable to Brookfield, while a shortfall would result in a payment from Brookfield to
Brookfield Renewable.
Power Services Agreements
Power Agency Agreements
Certain Brookfield Renewable subsidiaries have entered into Power Agency Agreements appointing
Brookfield as the exclusive agent of the owner in respect of the sales of electricity, including the
procurement of transmission and other additional services. In addition, Brookfield will schedule, dispatch
and arrange for transmission of the power produced and the power supplied to third-parties in accordance
with prudent industry practice. Pursuant to each Agreement, Brookfield will be entitled to be reimbursed
for any third-party costs incurred, and, in certain cases, receives an additional fee for its services in
connection with the sale of power and for providing the other services.
Energy Marketing Agreement
Brookfield has agreed to provide energy marketing services to Brookfield Renewable’s North American
businesses. Under this Agreement, Brookfield Renewable pays an annual energy marketing fee of $18
million per year (subject to increase by a specified inflation factor beginning on January 1, 2013). See
Note 24 - Direct operating costs.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 109
Voting Agreements
Brookfield Renewable entered into voting agreements with Brookfield whereby Brookfield, as managing
member of entities related to the Brookfield Americas Infrastructure Fund (the “BAIF Entities”) in which
Brookfield Renewable holds investments in certain United States and Brazil power generating operations
with institutional investors, agreed to assign to Brookfield Renewable their voting rights to elect the
Boards of Directors of the BAIF Entities. Brookfield Renewable’s economic interests in the BAIF Entities
in the United States and Brazil are 22% and 25%, respectively.
Brookfield Renewable entered into voting agreements with certain Brookfield subsidiaries whereby these
subsidiaries, as managing members of entities related to Brookfield Infrastructure Fund II (the “BIF II
Entities”) in which Brookfield Renewable holds investments in certain United States and Europe power
generating operations with institutional investors, agreed to provide to Brookfield Renewable the authority
to direct the election of the Boards of Directors of the BIF II Entities. Brookfield Renewable’s economic
interests in the BIF II Entities are between 40% and 50.1%.
The following table reflects the related party agreements and transactions on the consolidated statements
of income, for the year ended December 31:
(MILLIONS)
Revenues
Power purchase and revenue agreements
Wind levelization agreement
Direct operating costs
Energy purchases
Energy marketing fee
Insurance services
Management service costs
2015
2014
2013
469 $
433 $
6
6
475 $
439 $
(5) $
(9) $
(22)
(30)
(57) $
(48) $
(21)
(29)
(59) $
(51) $
456
6
462
(36)
(20)
(26)
(82)
(41)
$
$
$
$
$
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 110
The following table reflects the impact of the related party agreements and transactions on the
consolidated balance sheets as at December 31:
Related party
2015
2014
(MILLIONS)
Current assets
Due from related parties
Amounts due from
Current liabilities
Due to related parties
Amount due to
Brookfield
Equity accounted investments and other
Brookfield
$
$
$
52 $
5
57 $
54
9
63
41 $
56
23
-
$
64 $
21
2
79
Accrued distributions payable on LP
Units and Redeemable/Exchangeable
partnership units
Amount due to
Brookfield
Equity accounted investments and other
Current assets
Amounts due from Brookfield are non-interest bearing, unsecured and due on demand.
Current liabilities
Amounts due to Brookfield are unsecured, payable on demand and relate to recurring transactions.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 111
11. EQUITY-ACCOUNTED INVESTMENTS
The following are Brookfield Renewable’s equity-accounted investments as at December 31:
(MILLIONS)
Bear Swamp Power Co. L.L.C.
Galera Centrais Eletricas S.A.
Pingston Power Inc.
Brookfield Infrastructure Fund II Investees
Principal place Ownership
interest
of business
%
50 $
50
50
United States
Brazil
Canada
United States,
Europe
14 - 50
$
Carrying value
2015
106 $
24
60
7
197 $
2014
177
38
56
2
273
The following table outlines the changes in Brookfield Renewable’s equity-accounted investments for the
year ended December 31:
(MILLIONS)
Balance, beginning of year
Revaluation recognized through OCI
Share of net income
Dividends declared
Capital distributions, net
Foreign exchange translation
California Hydro Step Acquisition
Canada Hydro Step Acquisition
Share of OCI
Balance, end of year
$
$
2015
273 $
96
10
(19)
(144)
(19)
-
-
-
197 $
2014
290 $
56
3
(27)
-
(11)
(39)
-
1
273 $
The following tables summarize certain financial information of equity-accounted investments:
(MILLIONS)
As at December 31:
Current assets
Property, plant and equipment, at fair value
Other assets
Current liabilities
Long-term debt
Other liabilities
2015
$
45 $
848
65
37
460
73
2013
344
(15)
9
(18)
-
(12)
-
(19)
1
290
2014
42
708
74
27
184
70
(MILLIONS)
For the year ended December 31
Revenue
Net income
Share of net income (loss)
Cash earnings
Non-cash loss
2015
2014
2013
$
126 $
19
115 $
6
20
(10)
26
(23)
122
19
21
(12)
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 112
12. PROPERTY, PLANT AND EQUIPMENT, AT FAIR VALUE
The following table presents a reconciliation of property, plant and equipment at fair value:
(MILLIONS)
As at December 31, 2012
Additions(2)
Acquisitions through business combinations (Note 4)
Investment tax credit
Items recognized through OCI
Change in fair value
Foreign exchange
Items recognized through net income
Change in fair value
Depreciation
As at December 31, 2013
Additions(2)
Acquisitions through business combinations (Note 4)
Items recognized through OCI
Change in fair value
Foreign exchange
Items recognized through net income
Change in fair value
Depreciation
As at December 31, 2014
Additions(2)
Acquisitions through business combinations (Note 4)
Disposal (Note 5)
Items recognized through OCI
Change in fair value
Foreign exchange
Items recognized through net income
Change in fair value
Depreciation
As at December 31, 2015
Hydroelectric(1)(2)
$ 13,360 $
Wind(2) Other(2)(3)
2,272 $
70 $ 15,702
Total
240
935
(24)
(191)
(697)
(43)
(381)
3
452
-
8
(90)
(7)
(142)
-
-
-
243
1,387
(24)
(19)
(2)
9
(12)
(202)
(789)
(41)
(535)
$ 13,199 $
2,496 $
46 $ 15,741
135
79
1,341
1,075
-
-
214
2,416
1,587
(679)
11
(384)
57
(229)
(3)
(160)
-
1,644
(2)
(910)
1
(4)
9
(548)
$
15,210 $
3,315 $
41 $ 18,566
183
307
-
1,141
(1,585)
(2)
(407)
51
624
(230)
52
(336)
(43)
(200)
55
229
-
16
(54)
-
(9)
289
1,160
(230)
1,209
(1,975)
(45)
(616)
$
14,847 $
3,233 $
278 $ 18,358
(1) Includes intangible assets of $13 million (2014: $23 million and 2013: $31 million).
(2) Includes construction work in process (“CWIP”) of $405 million (2014: $210 million and 2013: $441 million). Additions during
the year ended December 31, 2015 were $284 million (2014: $173 million and 2013: $225 million).
(3) Includes biomass and co-generation (“Co-gen”).
The fair value of Brookfield Renewable’s property, plant and equipment is calculated as described in
Notes 2(f) - Property, plant and equipment and revaluation method and 2(n) - Critical estimates.
Judgment is involved in determining the appropriate estimates and assumptions in the valuation of
Brookfield Renewable’s property, plant and equipment. See Note 2(o)(iii) - Critical judgments in applying
accounting policies – Property, plant and equipment. Brookfield Renewable has classified it’s property,
plant and equipment under level 3 of the fair value hierarchy.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 113
Discount rates, terminal capitalization rates and exit dates used in the valuation methodology, are
provided in the following table:
United States
Canada
Brazil
Europe
2015
2014
2015
2014
2015
2014
2015
2014
Discount rate
Contracted
Uncontracted
Terminal capitalization rate(1)
Exit date
(1)
5.4%
7.1%
6.9%
5.2%
7.1%
7.1%
4.7%
6.4%
6.3%
4.8%
9.2%
6.7% 10.5%
6.5%
N/A
8.4%
9.7%
N/A
5.0%
6.8%
N/A
2031
N/A
N/A
N/A
N/A
2029
The terminal capitalization rate applies only to hydroelectric assets in the United States and Canada.
2035
2034
2034
2033
2035
The following table summarizes the impact of a change in discount rates, electricity prices and terminal
capitalization rates on the fair value of property, plant and equipment:
(BILLIONS)
50 bps increase in discount rates
50 bps decrease in discount rates
5% increase in future electricity prices
5% decrease in future electricity prices
50 bps increase in terminal capitalization rate(1)
50 bps decrease in terminal capitalization rate(1)
( 1 )
$
$
2015
(1.3)
1.6
0.6
(0.6)
(0.4)
2014
(1.3)
1.5
0.5
(0.5)
(0.3)
0.4
0.4
The terminal capitalization rate applies only to hydroelectric assets in the United States and Canada.
Terminal values are included in the valuation of hydroelectric assets in the United States and Canada.
For the hydroelectric assets in Latin America, cash flows have been included based on the duration of the
authorization or useful life of a concession asset without consideration of potential renewal value. The
weighted-average remaining duration of the authorization or useful life of a concession asset at
December 31, 2015, is 18 years (2014: 15 years). Consequently, there is no terminal value attributed to
the hydroelectric assets in Latin America. If an additional 20 years of cash flows were included in Latin
America, the fair value of property, plant and equipment would increase by approximately $1 billion.
The following table summarizes the percentage of total generation contracted under power purchase
agreements:
1 - 10 years
11 - 20 years
United States
55%
41%
Canada
86%
63%
Brazil
65%
54%
Europe
75%
14%
The following table summarizes power prices from long-term power purchase agreements that are linked
specifically to the related power generating assets:
Per MWh(1)
1 - 10 years
11 - 20 years
(1)
Assumes nominal prices based on weighted-average generation.
United States
Canada
Brazil
Europe
$
$
90 C$
102 C$
93 R$
95 R$
255 €
372 €
89
103
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 114
The following table summarizes the estimates of future electricity prices:
Per MWh(1)
1 - 10 years
11 - 20 years
(1)
United States
Canada
Brazil
Europe
$
$
70 C$
126 C$
101 R$
156 R$
290 €
448 €
87
106
Assumes nominal prices based on weighted-average generation.
Brookfield Renewable’s long-term view is anchored to the cost of securing new energy from renewable
sources to meet future demand growth. Based on current supply and demand fundamentals, Brookfield
Renewable has revised the year entry to 2023 from 2020. A further one year change would increase or
decrease the fair value of property, plant and equipment by approximately $60 million.
Had Brookfield Renewable’s revalued property, plant and equipment been measured on a historical cost
basis, the carrying amounts, net of accumulated depreciation would have been as follows at December
31:
(MILLIONS)
Hydroelectric
Wind
Other(1)
2015
6,313
2,780
262
9,355
$
$
2014
6,591
2,800
40
9,431
$
$
(1)
Included within the “Other” category are biomass and Co-gen.
13. OTHER LONG-TERM ASSETS
The composition of Brookfield Renewable’s other long-term assets as at December 31 is presented in the
following table:
(MILLIONS)
Restricted cash
Available-for-sale investments
Unamortized financing fees
Other
Cost
Accumulated
Amortization Net Book Value Net book value
2014
2015
$
138
$
14
38
32
$
222
$
-
-
(30)
(3)
(33)
$
138
$
14
8
29
81
31
9
35
$
189
$
156
At December 31, 2015, $138 million of restricted cash (2014: $81 million) was held primarily to satisfy
lease payments and credit agreements.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 115
14. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Brookfield Renewable’s accounts payable and accrued liabilities as at December 31 are as follows:
(MILLIONS)
Operating accrued liabilities
Interest payable on corporate and subsidiary borrowings
Accounts payable
LP Unitholders’ distributions, preferred limited partnership unit
distributions and preferred dividends payable(1)
Other
$
2015
145
44
43
19
33
$
2014
131
44
29
19
30
(1)
253
Includes amounts payable only to external LP Unitholders. Amounts payable to Brookfield are included in due to related
parties. Refer to Note 10 - Related party transactions.
284
$
$
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 116
15. LONG-TERM DEBT AND CREDIT FACILITIES
The composition of debt obligations as at December 31 is presented in the following table:
(MILLIONS EXCEPT AS NOTED)
Corporate borrowings
Series 3 (C$200)
Series 4 (C$150)
Series 6 (C$300)
Series 7 (C$450)
Series 8 (C$400)
Series 9 (C$400)
Subsidiary borrowings
North America
United States
Canada
Latin America
Europe
Credit facilities
Total debt
Add: Unamortized premiums(1)
Less: Unamortized financing fees(1)
Less: Current portion
2015
Weighted-average
Interest
rate (%)
Term
(years)
2014
Weighted-average
Interest
rate (%)
Term
(years)
5.3
5.8
6.1
5.1
4.8
3.8
5.0
5.3
5.6
5.4
10.1
3.9
5.5
1.4
2.8
$
20.9
0.9
4.8
6.1
9.4
6.5
145
108
217
325
289
289
$
1,373
7.0
$
3,203
13.1
8.9
11.9
11.0
9.3
4.5
$
$
$
1,471
4,674
347
631
5,652
368
7,393
4
(59)
(770)
5.3
5.8
6.1
5.1
4.8
-
5.3
5.3
5.7
5.4
7.3
3.5
5.3
1.4
3.8
$
21.9
1.9
5.8
7.1
-
172
129
258
388
344
-
6.7
$
1,291
8.3
$
3,468
13.8
10.2
10.4
12.5
10.4
4.5
$
$
$
1,798
5,266
189
594
6,049
401
7,741
8
(71)
(256)
(1)
Unamortized premiums and unamortized financing fees are amortized to interest expense over the terms of the borrowing.
$
6,568
$
7,422
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 117
Future maturities of Brookfield Renewable’s debt obligations, for each of the next five years and
thereafter are as follows:
(MILLIONS)
Corporate borrowings(1)
Subsidiary borrowings(1)
United States
Canada
Brazil
Europe
2016
2017
2018
2019
2020 Thereafter
Total
$
217 $
- $
145 $
- $
324 $
687 $ 1,373
355
117
28
53
770
778
45
28
48
899
770
48
38
51
59
46
39
55
1,052
199
23
174
36
61
618
1,218
1,041
178
363
3,487
3,203
1,471
347
631
7,025
Credit facilities
368
368
986 $ 3,487 $ 7,393
899 $ 1,052 $
Subsidiary borrowings and corporate borrowings and credit facilities include $4 million and $59 million of unamortized
premiums and deferred financing fees, respectively.
-
199 $
-
770 $
-
-
-
$
(1)
Future maturities of borrowings for interests accounted for on an equity-accounted basis for each of the
next five years and thereafter are as follows:
(MILLIONS)
United States
Canada
2016
2017
2018
2019
2020 Thereafter
- $
1 $
6 $
5 $
6 $
382 $
-
-
-
-
-
33
Total
400
33
- $
1 $
6 $
5 $
6 $
415 $
433
$
$
The unamortized financing fees of each debt obligation as at December 31 are as follows:
(MILLIONS)
Corporate borrowings
Unamortized financing fees, beginning of year
Additional financing fees
Amortization of financing fees
Unamortized financing fees, end of year
Subsidiary borrowings
Unamortized financing fees, beginning of year
Additional financing fees
Amortization of financing fees
Foreign exchange translation
Unamortized financing fees, end of year
Total
2015
2014
2013
$
$
$
$
$
5
1
(1)
5
66
7
(15)
(4)
54
59
$
$
$
$
$
6
-
(1)
5
46
39
(13)
(6)
66
71
$
$
$
$
$
8
-
(2)
6
46
17
(17)
-
46
52
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 118
Long-term debt and credit facilities are recorded at amortized cost.
The following table provides information about management’s best estimate of the fair value of long-term
debt and credit facilities as at December 31:
(MILLIONS)
Corporate borrowings
Subsidiary borrowings
United States
Canada
Brazil
Europe
Credit facilities
$
$
2015
Carrying value(1)
1,368
$
$
3,180
1,458
346
618
5,602
368
2014
Fair value Carrying value(1)
1,286
1,474
$
3,411
1,615
346
678
6,050
368
$
3,435
1,784
189
583
5,991
401
$
$
Fair value
1,428
3,769
2,013
189
634
6,605
401
$
Net of unamortized financing fees and premium.
(1)
Corporate borrowings
7,338
$
7,892
$
7,678
$
8,434
Corporate borrowings are obligations of a finance subsidiary of Brookfield Renewable, Brookfield
Renewable Energy Partners ULC (“BREP Finance”) (Note 28 - Subsidiary public issuers). BREP Finance
may redeem some or all of the borrowings from time to time, pursuant to the terms of the indenture. The
balance is payable upon maturity, and interest on corporate borrowings is paid semi-annually. The term
notes payable by BREP Finance are unconditionally guaranteed by Brookfield Renewable, BRELP and
certain other subsidiaries.
In March 2015, Brookfield Renewable issued C$400 million ($317 million) of medium-term corporate
notes, maturing in June 2025 at a fixed rate of 3.75%. Transaction costs of $1 million were incurred.
Subsidiary borrowings
Subsidiary borrowings are generally asset-specific, long-term, non-recourse borrowings denominated in
the domestic currency of the subsidiary. Subsidiary borrowings in North America and Europe consist of
both fixed and floating interest rate debt. Brookfield Renewable uses interest rate swap agreements to
minimize its exposure to floating interest rates. Subsidiary borrowings in Brazil consist of floating interest
rates of Taxa de Juros de Longo Prazo (“TJLP”), the Brazil National Bank for Economic Development’s
long-term interest rate, or Interbank Deposit Certificate rate (“CDI”), plus a margin.
In February 2015, Brookfield Renewable secured an 18-month extension on $75 million of debt
associated with a portfolio of hydroelectric and wind facilities in the United States held through the
Brookfield Americas Infrastructure Fund. The debt bears interest at LIBOR plus 2.75%, and matures in
August 2016.
In February 2015, as part of the acquisition of a 123 MW wind portfolio in Portugal, Brookfield Renewable
assumed loans with principal balances totaling €99 million ($109 million). The loans bear interest at an
initial weighted-average fixed rate of 6.28%, including the related interest rate swaps, and have a
weighted-average remaining term of 9.5 years.
In March 2015, as part of the acquisition of a 313 MW operating renewable power generation portfolio in
Brazil comprising of 43 MW of hydroelectric, 150 MW of wind, and 120 MW of biomass generating
capacity and a 55 MW biomass development project, Brookfield Renewable assumed R$631 million
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 119
($197 million) of debt with a combination of variable and fixed interest rates, and a weighted-average
remaining term of 12.7 years.
In May 2015, as part of the acquisition of a 120 MW hydroelectric facility in Brazil, Brookfield Renewable
assumed R$254 million ($83 million) of debt with variable interest rates of CDI plus 0.5% and 2.0%, and a
weighted-average remaining term of 7.6 years.
Effective June 30, 2015, the margin on C$194 million ($155 million) of debt associated with a 189 MW
wind facility in Ontario was reduced from 2.25% to 1.625%.
The final drawdown of €20 million ($22 million) was made in July 2015 on the construction and term loan
associated with 137 MW of wind projects in Ireland, bringing the total draw to €188 million ($227 million)
at a weighted average rate of 2.74% and maturing in December 2027.
Effective July 31, 2015, the margin on C$119 million ($95 million) of debt associated with a 51 MW wind
facility in Ontario was reduced from 2.25% to 1.625%, and the debt was up-financed by C$7 million ($5
million).
In September 2015, Brookfield Renewable secured financing in the amount of R$187 million ($47 million)
with respect to 90 MW of biomass capacity in Brazil, of which we drew R$139 million ($35 million). The
loan bears interest at a floating interest rate of the TJLP’s rate plus 1.4%, and matures in October 2035.
Equity-accounted investments
In February 2015, an equity-accounted investee of Brookfield Renewable refinanced indebtedness
associated with a 45 MW hydroelectric facility in British Columbia by issuing C$90 million ($76 million) of
bonds with an interest rate of 2.95%, maturing in May 2023. Brookfield Renewable owns a 50% equity-
accounted interest in this facility.
In October 2015, an equity-accounted investee of Brookfield Renewable completed a $400 million bond
financing associated with its 600 MW pumped storage and 10 MW hydroelectric facilities in New England.
The bond matures in 2025, and bears interest at a fixed interest rate of 4.89% on $375 million and a
floating interest rate of LIBOR plus a margin of 270 basis points on the remaining $25 million.
Simultaneously, the equity-accounted investee of Brookfield Renewable also completed a $26 million
letter of credit and working capital facility with a three-year term and a floating interest rate of LIBOR plus
a margin of 170 basis points. Brookfield Renewable owns a 50%, equity-accounted interest in this facility.
Credit facilities
In May 2015, Brookfield Renewable extended the maturity of its corporate credit facilities by one year to
June 2020 and also expanded the available amount to $1,310 million from $1,280 million. In November
and December 2015, we further expanded the available amount to $1,560 million. The applicable margin
is 1.20% and the credit facilities are used for general working capital purposes. The credit facilities are
available by way of advances in Canadian dollars, U.S. dollars, Euro (€) or British Pound Sterling (£) in
the form of (i) Canadian prime rate loans (ii) U.S. base rate loans (iii) bankers’ acceptance (“BA”) rate
loans (iv) LIBOR loans (v) EURIBOR loans and (vi) letters of credit. Refer to Note 30 – Commitments,
contingencies and guarantees for further details regarding letters of credit. The credit facilities bear
interest at the applicable BA rate, LIBOR or EURIBOR plus an applicable margin. The applicable margin
is tiered on the basis of Brookfield Renewable’s unsecured long-term debt rating. Standby fees are
charged on the undrawn balance.
Brookfield Asset Management has provided a $200 million committed unsecured revolving credit facility
maturing in December 2016, at LIBOR plus 2%.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 120
Brookfield Renewable and its subsidiaries issue letters of credit from some of its credit facilities for
general corporate purposes which include, but are not limited to, security deposits, performance bonds
and guarantees for debt service reserve accounts.
The following table summarizes the available portion of credit facilities as at December 31:
(MILLIONS)
Authorized credit facilities
Draws on credit facilities(1)
Issued letters of credit
Available portion of credit facilities
(1)
Amounts are unsecured and revolving. Interest rate is at the LIBOR plus 1.20% (December 31, 2014: 1.20%).
Dec 31
2015
Dec 31
2014
$
1,760
$
1,480
(368)
(218)
$
1,174
$
(401)
(227)
852
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 121
16. INCOME TAXES
The major components of income tax recovery (expense) for the year ended December 31 are as follows:
(MILLIONS)
Income tax recovery (expense) applicable to:
Current taxes
Attributed to the current period
Deferred taxes
Income taxes - origination and reversal of temporary differences
Relating to change in tax rates / imposition of new tax laws
Relating to unrecognized temporary differences and tax losses
Total income tax recovery (expense)
2015
2014
2013
$
$
$
$
(18) $
(18) $
(19)
87 $
6
(15)
78 $
60 $
30 $
15
(16)
29 $
11 $
24
14
(20)
18
(1)
The major components of deferred income tax recovery (expense) for the year ended December 31
recorded directly to OCI are as follows:
(MILLIONS)
Deferred income taxes attributed to:
Financial instruments designated as cash flow hedges
Other
Revaluation surplus
Origination and reversal of temporary differences
Relating to changes in tax rates / imposition of new tax laws
2015
2014
2013
$
8 $
(17)
12 $
(8)
(11)
-
(263)
(19)
(291) $
(408)
38
(366) $
$
98
6
93
Brookfield Renewable’s effective income tax (expense) recovery for the year ended December 31 is
different from its recovery at its statutory income tax rate due to the differences below:
(MILLIONS)
Statutory income tax (expense) recovery(1)
(Reduction) increase resulting from:
Increase in tax assets not recognized
Deemed profit method differences in Brazil
Differences between statutory rate and future tax rate
Losses recorded not taxable to Brookfield Renewable
Other
2015
2014
$
(15) $
(66) $
(15)
10
68
14
(2)
(16)
8
65
11
9
$
60 $
11 $
2013
(76)
(20)
12
69
13
1
(1)
Effective income tax recovery (expense)
(1)
Statutory income tax expense is calculated at the domestic rates applicable to the profits in the country concerned.
The above reconciliation has been prepared by aggregating the information for all of Brookfield
Renewable’s subsidiaries using the domestic rate in each tax jurisdiction.
The taxable temporary difference attributable to the Brookfield Renewable’s interest in its subsidiaries,
associates, and joint ventures is $1,248 million.
Brookfield Renewable’s effective income tax rate was negative 139.53% for the year ended December
31, 2015 (2014: negative 5.76%). The effective tax rate is less than the statutory rate primarily due to rate
differentials and non-controlling interests income not subject to tax.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 122
The following table details the expiry date, if applicable, of the unrecognized deferred tax assets as at
December 31:
(MILLIONS)
2016 to 2020
2021 and thereafter
$
$
2015
-
77
77
$
$
2014
1
77
78
The deferred tax assets and liabilities of the following temporary differences have been recognized in the
consolidated financial statements for the year ended December 31:
Recognized
in Net
(MILLIONS)
Non-capital losses
Amount available for future
deductions
Difference between tax and carrying
value
Jan 1,
2015
403 $
$
(loss)
73 $
income Recognized
Business
in Equity Combinations
Foreign
Exchange
(1) $
5 $
(22) $
Dec 31,
2015
458
88
(11)
-
-
(12)
65
(2,986)
16
(279)
(35)
223
(3,061)
Net deferred tax (liabilities) assets
$ (2,495) $
78 $ (280) $
(30) $
189 $ (2,538)
Recognized
in Net
(MILLIONS)
Non-capital losses
Amount available for future
deductions
Difference between tax and carrying
value
Jan 1,
2014
341 $
$
(loss)
46 $
income Recognized
Business
in Equity Combinations
Foreign
Exchange
15 $
10 $
(9) $
Dec 31,
2014
403
110
(12)
-
-
(10)
88
(2,599)
(5)
(366)
(130)
114
(2,986)
Net deferred tax (liabilities) assets
$ (2,148) $
29 $ (351) $ (120) $
95 $ (2,495)
Recognized
in Net
(MILLIONS)
Non-capital losses
Amount available for future
deductions
Difference between tax and carrying
value
Jan 1,
2013
270 $
$
(loss)
32 $
income Recognized
Business
in Equity Combinations
Foreign
Exchange
7 $
41 $
(9) $
Dec 31,
2013
341
131
(13)
-
-
(8)
110
(2,669)
(1)
97
(123)
97
(2,599)
Net deferred tax (liabilities) assets
$ (2,268) $
18 $
104 $
(82) $
80 $ (2,148)
The deferred income tax liabilities includes $2,924 million (2014: $2,650 million) of liabilities which relate
to property, plant and equipment revaluations included in equity.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 123
17. OTHER LONG-TERM LIABILITIES
Brookfield Renewable’s other long-term liabilities as at December 31 are comprised of the following:
(MILLIONS)
Pension obligations (Note 22)
Decommissioning retirement obligations
Deferred and contingent consideration (Note 4)
Other
Concession payment liability
$
$
2015
56
47
32
28
9
2014
63
48
13
10
13
$
172
$
147
Brookfield Renewable is required to pay the Brazilian Federal Government for the usage of public assets
over the concession terms associated with certain of its Brazilian facilities. Accordingly, as at December
31, 2015, Brookfield Renewable recorded a liability associated with a future obligation relating to
concession payments of $9 million (2014: $13 million). The future obligation is being settled through
monthly payments made over the concession term.
Brookfield Renewable has recorded decommissioning retirement obligations associated with certain
power generating assets. The estimated cost of decommissioning activities is based on a third party
assessment. The decommissioning retirement obligation of $47 million at December 31, 2015 (2014: $48
million) has been established for hydroelectric and wind operation sites in Canada and United States that
are expected to be restored between the years 2031 to 2138.
18. CAPITAL MANAGEMENT
Brookfield Renewable’s primary capital management objectives are to ensure the sustainability of its
capital to support continuing operations, meet its financial obligations, allow for growth opportunities and
provide stable distributions to its LP Unitholders. Brookfield Renewable’s capital is monitored through
debt to total capitalization which is defined as the total long-term debt and credit facilities divided by total
long-term debt and credit facilities plus equity.
Brookfield Renewable has provided covenants to certain of its lenders for its corporate borrowings and
credit facilities. The covenants require Brookfield Renewable to meet minimum debt to capitalization
ratios. Subsidiaries of Brookfield Renewable have provided covenants to certain of their lenders for their
property-specific borrowings. These covenants vary from one credit agreement to another and include
ratios that address debt service coverage. Certain lenders have also put in place requirements that oblige
Brookfield Renewable and its subsidiaries to maintain debt and capital expenditure reserve accounts. The
consequences to the subsidiaries as a result of failure to comply with their covenants could include a
limitation of distributions from the subsidiaries to Brookfield Renewable, as well as repayment of
outstanding debt. Brookfield Renewable is dependent on the distributions made by its subsidiaries to
service its debt.
Financial covenants associated with Brookfield Renewable’s various banking and credit arrangements
are reviewed regularly and controls are in place to maintain compliance with these covenants. Brookfield
Renewable complied with all material financial covenants for the years ended December 31, 2015, 2014
and 2013.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 124
Brookfield Renewable’s strategy during December 31, 2015, which was unchanged from 2014, was to
maintain the measure set out in the following schedule as at December 31:
(MILLIONS)
Total debt
Current portion of long-term debt
Long-term debt and credit facilities
Deferred income tax liabilities, net(1)
Participating non-controlling interests - in operating subsidiaries
General partnership interest in a holding subsidiary held by
Brookfield
Participating non-controlling interests - in a holding
subsidiary - Redeemable/Exchangeable units held by Brookfield
Preferred equity
Preferred limited partners' equity
Limited partners' equity
Total capitalization
Debt to total capitalization
(1)
Deferred income tax liabilities less deferred income tax assets.
19. NON-CONTROLLING INTERESTS
2015
2014
$
770 $
6,568
7,338
2,538
2,587
256
7,422
7,678
2,495
2,062
52
59
2,559
610
128
2,827
$
18,639 $
39%
2,865
728
-
3,167
19,054
40%
Brookfield Renewable’s non-controlling interests are comprised of the following as at December 31:
(MILLIONS)
Participating non-controlling interests - in operating subsidiaries
General partnership interest in a holding subsidiary held by Brookfield
Participating non-controlling interests - in a holding subsidiary -
Redeemable/Exchangeable units held by Brookfield
Preferred equity
Total
Preferred equity
$
2015
2,587 $
52
2,559
610
2014
2,062
59
2,865
728
$
5,808 $
5,714
Brookfield Renewable’s preferred equity as at December 31 consists of Class A Preference Shares of
Brookfield Renewable Power Preferred Equity Inc. (“BRP Equity”) as follows:
Earliest
(MILLIONS)
Series 1 (C$136)
Series 2 (C$113)
Series 3 (C$249)
Series 5 (C$175)
Series 6 (C$175)
Shares
outstanding
5.45
4.51
9.96
7.00
7.00
33.92
permitted Dividends declared
for the year ended
Cumulative
dividend
rate(1)
3.36% Apr 30, 2020 $
redemption
date
2015
2014
2015
6 $
12 $
98 $
3.03% Apr 30, 2020
4.40% Jul 31, 2019
5.00% Apr 30, 2018
5.00% Jul 31, 2018
2
8
7
7
-
10
8
8
81
179
126
126
$
30 $
38 $
610 $
2014
214
-
214
150
150
728
(1) Series 2 dividend rate represents annualized distribution based on the most recent quarterly floating rate.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 125
The Class A Preference Shares do not have a fixed maturity date and are not redeemable at the option of
the holders. As at December 31, 2015, none of the issued Class A Preference Shares have been
redeemed by BRP Equity.
On April 1, 2015, the fixed dividend rate on the Series 1 Preference Shares for the five years
commencing May 1, 2015 and ending April 30, 2020 was reset and, if declared, will be paid at an annual
rate of 3.355% (C$0.2096875 per share per quarter). The holders of 4,518,289 Series 1 Preference
Shares exercised their right to convert their shares into Class A, Series 2 Preference Shares on a one-
for-one basis. The holders of the Series 2 Preference Shares will be entitled to receive floating rate
cumulative preferential cash dividends, equal to the T-Bill Rate plus 2.620%. The quarterly dividend in
respect of the November 1, 2015 to January 31, 2016 dividend period was paid on January 31, 2016 at
an annual rate of 3.03% (C$ 0.19112 per share).
The holders of the Series 3 Preference Shares are entitled to receive fixed cumulative dividends. The
dividend will reset on July 31, 2019 and every five years thereafter at a rate equal to the then five year
Government of Canada Bond yield plus 2.94%.
The holders of the Series 3 Preference Shares will have the right, at their option, to convert their shares
into Class A, Series 4 Preference Shares on a one-for-one basis on the earliest permitted redemption
date and every five years thereafter. The holders of the Series 4 Preference Shares will be entitled to
receive floating rate cumulative preferential cash dividends, equal to the T-Bill Rate plus 2.94%.
The holders of the Series 5 and 6 Preference Shares are entitled to receive fixed cumulative dividends.
Brookfield Renewable, BRELP and certain holding company subsidiaries fully and unconditionally
guarantee the payment of dividends on all of the Class A Preference Shares, the amount due on
redemption, and the amounts due on the liquidation, dissolution or winding-up of BRP Equity.
Class A Preference Shares for Cancellation – Normal course issuer bid
On June 23, 2015, Brookfield Renewable announced that the Toronto Stock Exchange had accepted a
notice of BRP Equity’s intention to commence a normal course issuer bid in connection with its
outstanding Class A Preference Shares. Under this normal course issuer bid, Brookfield Renewable is
permitted to repurchase up to 10% of the total public float for each respective series of the Class A
Preference Shares. Repurchases were authorized to commence on June 26, 2015 and will terminate on
June 25, 2016, or earlier should Brookfield Renewable complete its repurchases prior to such date.
For the year ended December 31, 2015, 78,537 Class A, Series 1, Series 2 and Series 3 Preference
Shares were repurchased at a cost of $1 million, and cancelled.
Class A, Series 5 Preference Shares – Exchange offer
In November 2015, Brookfield Renewable announced its offer to exchange (the “Exchange Offer”) each
issued and outstanding Class A, Series 5 Preference Share of BRP Equity with an annual dividend rate of
5.00% (the “Series 5 Preference Shares”) for one newly issued Class A, Series 5 Preferred Limited
Partnership Unit (the “Preferred LP Units”) of Brookfield Renewable with an annual distribution rate of
5.59%.
The Exchange Offer was open for acceptance until, and completed on, February 8, 2016. On that date, a
total of 2,885,496 Series 5 Preference Shares were tendered and exchanged for an equal number of
Series 5 Preferred LP Units; refer to Note 31 – Subsequent Events.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 126
Participating non-controlling interests – in operating subsidiaries
The net change in participating non-controlling interests – in operating entities is as follows:
(MILLIONS)
As at December 31, 2012
Net income
OCI
Capital contributions(1)
Distributions
Other
As at December 31, 2013
Net income
OCI
Capital contributions(1)
Distributions
Other
As at December 31, 2014
Net income
OCI
Capital contributions(1)
Distributions
Other
As at December 31, 2015
Interests held by third parties
(1)
Brookfield
Americas
Brookfield
Infrastructure Infrastructure The Catalyst
Brookfield
Energia
Group Renovável
$
$
$
$
Fund
806 $
21
133
51
(119)
(1)
891 $
14
54
-
(45)
-
914 $
26
89
-
(70)
(1)
958 $
Fund II
- $
1
(2)
214
-
(6)
207 $
22
187
610
(89)
-
937 $
27
144
460
(126)
(1)
1,441 $
75-80%
50-60%
123 $
18
(26)
-
-
1
116 $
14
8
-
(12)
-
126 $
14
(12)
-
(7)
-
121 $
25%
58 $
1
(10)
-
(3)
-
46 $
-
-
-
(3)
(11)
32 $
-
(10)
-
(1)
1
22 $
Other
Total
41 $ 1,028
41
-
99
4
265
-
(122)
-
(2)
(8)
43 $ 1,303
51
1
259
10
610
-
(149)
-
(12)
(1)
53 $ 2,062
69
2
(7)
204
-
460
(4)
(208)
1
-
45 $ 2,587
Capital contributions are for the purposes of acquisitions and to fund expenses.
24-30%
23-50%
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 127
The following tables summarize certain financial information of operating subsidiaries that have non-
controlling interests that are material to Brookfield Renewable:
Brookfield
Americas
Brookfield
(MILLIONS)
Interests held by third parties
Place of business
For the year ended December 31, 2013:
Revenue
Net (loss) income
Total comprehensive (loss) income
Net (loss) income allocated to
non-controlling interests
For the year ended December 31, 2014:
Revenue
Net income
Total comprehensive income (loss)
Net income allocated to
non-controlling interests
As at December 31, 2014:
Property, plant and equipment, at fair value
Total assets
Total borrowings
Total liabilities
Carrying value of non-controlling interests
For the year ended December 31, 2015:
Revenue
Net income
Total comprehensive income (loss)
Net income allocated to
non-controlling interests
As at December 31, 2015:
Property, plant and equipment, at fair value
Total assets
Total borrowings
Total liabilities
Carrying value of non-controlling interests
Infrastructure Infrastructure The Catalyst
Group
Fund II
Fund
Other
Total
75-80%
United States
Brazil
50-60%
United States
Brazil
25%
Europe United States
23-50%
United States
Brazil
Canada
$
$
195 $
23
258
74 $
2
(1)
188 $
72
(15)
25 $
2
2
482
99
244
21
1
18
1
41
164 $
18
85
211 $
46
422
162 $
56
87
31 $
3
45
568
123
639
14
22
14
1
51
$ 1,959 $ 3,316 $ 1,049 $
3,572
1,617
1,946
2,021
777
853
914 $
1,159
539
556
126 $
937 $
494 $ 6,818
7,281
529
2,986
53
73
3,428
85 $ 2,062
136 $
34
144
402 $
49
247
160 $
56
8
30 $
8
(51)
728
147
348
26
27
14
2
69
$ 1,786 $ 4,417 $
981 $
1,840
563
628
958 $ 1,441 $
4,770
1,870
2,236
1,096
496
512
121 $
$
398 $ 7,582
8,115
409
2,973
44
61
3,437
67 $ 2,587
$
$
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 128
The following table summarizes certain financial information regarding General partnership interest in a
holding subsidiary held by Brookfield and Participating non-controlling interests – in a holding subsidiary -
Redeemable/Exchangeable units held by Brookfield:
(MILLIONS)
For the year ended December 31:
Revenue
Net income
Comprehensive income (loss)
Net income allocated to(1):
GP interest
Redeemable/Exchangeable partnership units
As at December 31:
Property, plant and equipment, at fair value
Total assets
Total borrowings
Total liabilities
Carrying value of(2):
GP interest
Redeemable/Exchangeable partnership units
(1)
2015
2014
2013
$
1,628 $
103
5
1,704 $
203
1,071
1,706
215
(333)
-
1
1
55
1
67
$ 18,358 $ 18,566
19,849
7,678
10,968
19,507
7,338
10,744
52
2,559
59
2,865
Allocated based on weighted-average GP interest, Redeemable/Exchangeable partnership units and LP Units of 2.7 million, 129.7 million, and
143.3 million, respectively (2014: 2.7 million, 129.7 million, and 138.8 million, respectively and 2013: 2.7 million, 129.7 million, and 132.9 million,
respectively).
Allocated based on outstanding GP interest, Redeemable/Exchangeable partnership units and LP Units of 2.7 million, 129.7 million, and 143.2
million, respectively (2014: 2.7 million, 129.7 million, and 143.4 million, respectively).
(2)
As at December 31, 2015, general partnership units, representing the 1% general partnership interest in
BRELP held by Brookfield (“GP interest”), and Redeemable/Exchangeable partnership units outstanding
were 2,651,506 (December 31, 2014: 2,651,506) and 129,658,623 (December 31, 2014: 129,658,623),
respectively.
Distributions
The composition of the distributions for the year ended December 31 is presented in the following table:
(MILLIONS)
General partnership interest in a holding
subsidiary held by Brookfield
Incentive distribution
Participating non-controlling interests - in a
holding subsidiary - Redeemable/
Exchangeable units held by Brookfield
2015
2014
4 $
8
12 $
4
2
6
217 $
229 $
201
207
$
$
$
$
General partnership interest in a holding subsidiary held by Brookfield and Participating non-controlling
interests – in a holding subsidiary - Redeemable/Exchangeable units held by Brookfield
Brookfield, as the owner of the 1% GP interest, is entitled to regular distributions plus an incentive
distribution based on the amount by which quarterly distributions exceed specified target levels. To the
extent that LP Unit distributions exceed $0.375 per LP Unit per quarter, the incentive is 15% of
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 129
distributions above this threshold. To the extent that quarterly LP Unit distributions exceed $0.4225 per
LP Unit, the incentive distribution is equal to 25% of distributions above this threshold.
Consolidated equity includes Redeemable/Exchangeable partnership units and the GP interest. The
Redeemable/Exchangeable partnership units are held 100% by Brookfield, which at its discretion has the
right to redeem these units for cash consideration. No Redeemable/Exchangeable partnership units have
been redeemed for cash consideration. Since this redemption right is subject to Brookfield Renewable’s
right, at its sole discretion, to satisfy the redemption request with LP Units of Brookfield Renewable, the
Redeemable/Exchangeable partnership units are classified as equity in accordance with IAS 32, Financial
Instruments: Presentation. The Redeemable/Exchangeable partnership units and GP interest are
presented as non-controlling interests since they provide Brookfield the direct economic benefits and
exposures to the underlying performance of BRELP. The LP Units issued by Brookfield Renewable and
the Redeemable/Exchangeable partnership units issued by its subsidiary BRELP have the same
economic attributes
the redemption right described above. The
for
Redeemable/Exchangeable partnership units and the GP interest participate in earnings and distributions
on a per unit basis equivalent to the per unit participation of the LP Units of Brookfield Renewable.
in all respects, except
As at December 31, 2015, general partnership units,
interest and
Redeemable/Exchangeable partnership units outstanding were 2,651,506 (December 31, 2014:
2,651,506) and 129,658,623 (December 31, 2014: 129,658,623), respectively.
representing
the GP
20. PREFERRED LIMITED PARTNERS’ EQUITY
In November 2015, Brookfield Renewable issued 7,000,000 Class A, Series 7 Preferred LP Units at a
price of C$25 per unit for gross proceeds of C$175 million ($132 million). Transaction costs of $4 million
were incurred. The holders of the Series 7 Preferred LP Units will be entitled to receive fixed cumulative
quarterly distributions at an annual rate of C$1.375 per unit, a yield of 5.5%, for the initial period ending
January 31, 2021. Thereafter, the distribution rate will be reset every five years at a rate equal to the
greater of (i) the 5-year Government of Canada Bond yield plus 4.47%, and (ii) 5.5%. The Series 7
Preferred LP Units are redeemable on or after January 31, 2021.
The holders of Series 7 Preferred LP Units will have the right, at their option, to convert their Series 7
Preferred LP Units into Class A, Series 8 Preferred LP Units, subject to certain conditions, on January 31,
2021 and every five years thereafter. The holders of the Series 8 Preferred LP Units will be entitled to
receive cumulative quarterly floating distributions at an annual rate equal to the 3-month Government of
Canada Treasury Bill yield plus 4.47%.
As noted in Note 19 – Non-Controlling Interests, in February 2016 a total of 2,885,496 Series 5
Preference Shares of BRP Equity were tendered and exchanged for an equal number of Series 5
Preferred LP Units of Brookfield Renewable; refer to Note 31 - Subsequent Events.
The Class A Preferred LP Units do not have a fixed maturity date and are not redeemable at the option of
the holders. As at December 31, 2015, none of the Class A Preferred LP Units have been redeemed by
Brookfield Renewable.
21. LIMITED PARTNERS’ EQUITY
Limited partners’ equity
As at December 31, 2015, 143,188,170 LP Units were outstanding (December 31, 2014: 143,356,854)
including 40,026,986 (December 31, 2014: 40,026,986) held by Brookfield. Brookfield owns all general
partnership interests in Brookfield Renewable representing a 0.01% interest.
During the year ended December 31, 2015, 171,605 LP Units (2014: 121,941 LP Units) were issued
under the distribution reinvestment plan.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 130
LP Units Purchased for Cancellation – Normal course issuer bid
For the year ended December 31, 2015, 340,289 LP Units were repurchased at a cost of $9 million. The
premium paid to purchase the LP Units in excess of the stated value was charged to limited partners’
equity. Repurchases were initially authorized to commence on December 29, 2014 and terminate on
December 28, 2015. Pursuant to this bid, the Board of Directors of BRPL authorized Brookfield
Renewable to repurchase up to 7.1 million LP Units, representing approximately 5% of the issued and
outstanding LP Units. In December 2015, Brookfield Renewable renewed the normal course issuer bid
and the authorization to repurchase up to 7.1 million LP Units will expire on December 28, 2016, or earlier
should Brookfield Renewable complete its repurchases prior to such date. All LP Units acquired under the
normal course issuer bid are cancelled. Outside of pre-determined trading blackout periods, purchases
under Brookfield Renewable’s normal course issuer bid will be completed based upon management’s
discretion. Brookfield Renewable has not established an automatic securities purchase plan for its LP
Units.
As at December 31, 2015, Brookfield’s direct and indirect interest of 169,685,609 LP Units and
Redeemable/Exchangeable partnership units represents approximately 62% of Brookfield Renewable on
a fully-exchanged basis.
On an unexchanged basis, Brookfield holds a 28% direct limited partnership interest in Brookfield
Renewable, a 48% direct interest in BRELP through the ownership of Redeemable/Exchangeable
partnership units and a direct 1% GP interest in BRELP as at December 31, 2015.
Distributions
Distributions may be made by the general partner of Brookfield Renewable with the exception of
instances that there is insufficient cash available, payment rends Brookfield Renewable unable to pay its
debt or payment of which might leave Brookfield Renewable unable to meet any future contingent
obligations.
For the year ended December 31, 2015, Brookfield Renewable declared distributions on its LP Units of
$239 million or $1.66 per LP Unit (2014: $216 million or $1.55 per LP Unit).
The composition of the distribution for the year ended December 31 is presented in the following table:
(MILLIONS)
Brookfield
External LP Unitholders
2015
67 $
172
239 $
2014
62
154
216
$
$
In February 2015, unitholder distributions were increased to $1.66 per unit on an annualized basis, an
increase of eleven cents per unit, which took effect with the distribution payable in March 2015.
22. PENSION AND EMPLOYEE FUTURE BENEFITS
Brookfield Renewable offers a number of pension plans to its employees, as well as certain health care,
dental care, life insurance and other benefits to certain retired employees pursuant to Brookfield
Renewable’s policy. The plans are funded by contributions from Brookfield Renewable and from plan
members. Pension benefits are based on length of service and final average earnings and some plans
are indexed for inflation after retirement. The pension plans relating to employees of Brookfield
Renewable have been included in the consolidated financial statements.
The Brookfield Renewable Pension Governance Committee
the
implementation of strategic decisions and monitoring of the administration of Brookfield Renewable’s
responsible
(BRGC)
for
is
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 131
defined benefit pension plans. Specifically, the BRGC will establish the investment strategies, approve
the funding policies as well as assess that Brookfield Renewable has complied with all applicable law,
fiduciary, reporting and disclosure requirements.
Actuarial valuations for Brookfield Renewable’s pension plans are required as per governing provincial or
federal regulations. For Québec and the United States registered plans, actuarial valuations are required
annually. For Ontario registered plans, actuarial valuations are required on a triennial basis if the funding
level of the plan is above a certain threshold. Currently, all Ontario registered plans are on a triennial
schedule. The dates of the most recent actuarial valuations for Brookfield Renewable’s pension and non-
pension benefit plans range from December 2013 to April, 2015. Brookfield Renewable measures its
accrued benefit obligations and the fair value of plan assets for accounting purposes as at December 31
of each year.
The benefit liabilities represent the amount of pension and other employee future benefits that Brookfield
Renewable’s employees and retirees have earned at year-end. The benefit obligation under these plans
is determined through periodic actuarial reports which were based on the assumptions indicated in the
following table.
Actuarial assumptions as at December 31:
Defined benefit Non-pension Defined benefit Non-pension Defined benefit Non-pension
benefit plans
pension plans
pension plans
pension plans
benefit plans
benefit plans
2015
(%)
2014
(%)
2013
(%)
2.9 - 4.7
2.0 - 2.5
4.2 - 4.7
N/A
2.6 - 4.2
2.0 - 2.5
4.0 - 4.3
N/A
4.0 - 5.0
2.0 - 2.5
4.9 - 5.0
N/A
2.5 - 3.0
N/A
2.5 - 3.0
6.3 - 7.1
2.5 - 4.0
N/A
3.0 - 4.0
6.5 - 7.2
2.5 - 4.0
N/A
3.0 - 3.0
6.5 - 7.7
Discount rate
Rate of price inflation
Rate of compensation
increases
Health care trend rate(1)
(1)
Assumed immediate trend rate at year end.
Plan obligations and the annual pension expense are determined on an actuarial basis and are affected
by numerous assumptions and estimates including the market value of plan assets, estimates of the long-
term rate of return on plan assets, discount rates, rate of compensation increases and other assumptions.
The discount rate, rate of price inflation and inflation-linked assumptions and health care cost trend rate
are the assumptions that generally have the most significant impact on the benefit obligations.
The discount rate for benefit obligation purposes is the rate at which the pension obligation could be
effectively settled. Rate of compensation increases reflect the best estimate of merit increases to be
provided, consistent with assumed inflation rates.
A 50 basis point change in the assumptions mentioned before, used for the calculation of the benefit
obligations as at December 31, 2015, would result in the following increase (decrease) of the benefit
obligations:
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 132
(MILLIONS)
Discount rate
50 basis point increase
50 basis point decrease
Rate of price inflation and inflation-linked assumptions
50 basis point increase
50 basis point decrease
Health care cost trend rate
50 basis point increase
50 basis point decrease
Defined benefit
pension plans
Non-pension
benefit plans
(8)
8
5
(4)
N/A
N/A
(2)
3
N/A
N/A
3
(2)
The sensitivity analysis presented above may not be representative of the actual change in the defined
benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another
as some of the assumptions may be correlated.
Expense recognized in the consolidated statements of income and consolidated statements of
comprehensive income (loss) for the year ended December 31:
(MILLIONS)
Current service costs
Past service costs (recovery)
Interest expense
Administrative expenses
Recognized in consolidated
statement of income (loss)
Remeasurement of the net
defined benefit liability:
Return on plan assets
Actuarial changes arising
from changes in
demographic assumptions
Actuarial changes arising
from changes in
financial assumptions
Experience adjustments
Recognized in consolidated
statement of comprehensive
income (loss)
Total
Defined benefit Non-pension Defined benefit Non-pension Defined benefit Non-pension
pension plans benefit plans
pension plans benefit plans
2013
2014
$
2
$
3
1
1
1
-
1
1
pension plans benefit plans
2015
$
3
1
1
1
1
(1)
2
-
1
2
1
-
1
(1)
1
-
$
$
$
6
2
5
4
5
1
(1)
-
(4)
-
(7)
2
(5)
1
2
2
(2)
2
(1)
-
8
(2)
3
-
(4)
-
$
1
7
$
(6)
(4)
$
3
8
$
5
9
$
(9)
(4)
$
-
-
(3)
-
(3)
(2)
The amounts included in the consolidated balance sheets arising from Brookfield Renewable’s obligations
in respect of its defined benefit plans are as follows:
Defined benefit Non-pension Defined benefit Non-pension Defined benefit Non-pension
benefit plans
pension plans
pension plans
pension plans
benefit plans
benefit plans
(MILLIONS)
Present value of defined
benefit obligation
Fair value of plan assets
Net liability
2015
2014
2013
$
$
124
(103)
21
$
$
35
-
35
$
$
128
(108)
20
$
$
43
-
43
$
$
80
(74)
6
$
$
27
-
27
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 133
Defined benefit obligations
The movement in the defined benefit obligation for the year ended December 31 is as follows:
Defined benefit Non-pension Defined benefit Non-pension Defined benefit Non-pension
benefit plans
pension plans
pension plans
pension plans
benefit plans
benefit plans
(MILLIONS)
Balance, beginning of year
Current service cost
Past service cost (recovery)
Interest expense
Remeasurement losses (gains)
Actuarial changes arising
from changes in
$
2015
$
128
3
1
5
$
43
1
(1)
2
2014
$
80
3
1
4
$
27
1
2
1
2013
$
82
2
1
4
29
1
(1)
1
demographic assumptions
2
(5)
1
2
2
-
Actuarial changes arising
from changes in
financial assumptions
Experience adjustments
Benefits paid
Business combination
Exchange differences
Balance, end of year
(2)
2
(5)
-
(10)
124
$
(1)
-
(2)
-
(2)
35
$
8
(2)
(4)
42
(5)
128
$
3
-
(1)
10
(2)
43
$
$
(4)
-
(3)
-
(4)
80
$
(3)
-
(1)
1
-
27
Expected employer’s contributions to the defined benefit plans for the year ended December 31, 2016 are
$5 million.
Fair value of plan assets
The movement in the fair value of plan assets for the year ended December 31 is as follows:
Defined benefit Non-pension Defined benefit Non-pension Defined benefit Non-pension
benefit plans
pension plans
pension plans
pension plans
benefit plans
benefit plans
(MILLIONS)
Balance, beginning of year
Interest income
Return on plan assets
Employer contributions
Business combination
Benefits paid
Exchange differences
Balance, end of year
$
$
2015
$
108
4
1
5
-
(5)
(10)
103
-
-
-
2
-
(2)
-
-
$
$
2014
$
74
4
4
8
28
(4)
(6)
108
-
-
-
1
-
(1)
-
-
$
$
2013
$
64
3
7
7
-
(3)
(4)
74
-
-
-
1
-
(1)
-
-
$
$
$
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 134
The composition of plan assets as at December 31 is as follows:
Asset category:
Cash and cash equivalents
Equity securities
Debt securities
Real estate
23. OTHER INCOME
2015
(%)
1
58
40
1
100
2014
(%)
-
56
43
1
100
Brookfield Renewable’s other income for the year ended December 31 is comprised of the following:
(MILLIONS)
Gain on disposal (Note 5)
Gains on settlement of foreign currency contracts
Compensation related to expired Brazilian
concession agreements(1)
Interest income and other
2015
2014
$
53 $
31
17
21
- $
-
-
2013
-
-
-
10
11
(1)
11
In July 2015, concession agreements relating to two Brazilian hydroelectric facilities expired. Brookfield Renewable elected not
to renew these concession agreements in exchange for compensation of $17 million.
122 $
10 $
$
24. DIRECT OPERATING COSTS
Brookfield Renewable’s direct operating costs for the year ended December 31 are comprised of the
following:
(MILLIONS)
Operations, maintenance and administration
$
Water royalties, property taxes and other
Fuel and power purchases
Energy marketing fees (Note 10)
Total direct operating costs
$
2015
396
119
15
22
2014
353
130
20
21
$
2013
331
137
42
20
$
552
$
524
$
530
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 135
25. OTHER
Brookfield Renewable’s other for the year ended December 31 is comprised of the following:
(MILLIONS)
Change in fair value of property, plant and equipment (Note 12)
$
Unrealized loss on available-for-sale securities (Note 13)
Other
2015
(38) $
(25)
-
2014
9 $
-
(6)
$
(63) $
3 $
2013
(41)
-
10
(31)
26. FOREIGN CURRENCY TRANSLATION
Brookfield Renewable’s foreign currency translation for the year ended December 31 shown in the
consolidated statement of comprehensive income (loss) is comprised of the following:
(MILLIONS)
Foreign currency translation on
Property, plant and equipment, at fair value (Note 12)
Long-term debt and credit facilities
Deferred income tax liabilities and assets
Other assets and liabilities
Unrealized gains on net investment hedges
2015
2014
2013
$
(1,975) $
(910) $
(789)
697
202
(62)
55
352
112
(21)
69
263
89
(64)
-
$
(1,083) $
(398) $
(501)
27. SUPPLEMENTAL INFORMATION
The net change in working capital balances for the year ended December 31 shown in the consolidated
statements of cash flows is comprised of the following:
(MILLIONS)
Trade receivables and other current assets
Accounts payable and accrued liabilities
Other assets and liabilities
2015
(72)
2
8
(62)
$
$
2014
20
$
(54)
14
(20)
$
2013
47
(42)
(4)
1
$
$
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 136
28. SUBSIDIARY PUBLIC ISSUERS
The following tables provide consolidated summary financial information for Brookfield Renewable, BRP
Equity, and BREP Finance:
(MILLIONS)
As at December 31, 2015:
Current assets
Long-term assets
Current liabilities
Long-term liabilities
Participating non-controlling
interests - in operating
subsidiaries
Participating non-controlling
interests -in a holding subsidiary
- Redeemable/Exchangeable
units held by Brookfield
Preferred equity
Preferred limited partners' equity
As at December 31, 2014:
Brookfield
Renewable
BRP
Equity
BREP
Finance
Holding
Brookfield
Other Consolidating Renewable
Entities(1) Subsidiaries(2) adjustments(3) consolidated
$
24 $
- $ 1,387 $
111 $
1,298 $ (2,220) $
600
2,957
603
-
15,605
18,780
(19,038)
18,907
26
-
8
-
231
2,233
967
1,151
378
9,251
(2,220)
(1,281)
1,245
9,499
-
-
-
-
128
-
610
-
-
-
-
-
-
2,587
-
2,587
2,559
-
128
-
-
-
-
-
(128)
2,559
610
128
Current assets
Long-term assets
Current liabilities
Long-term liabilities
$
21 $
- $ 1,307 $
135 $
1,169 $ (1,938) $
694
3,166
717
-
16,666
20,014
(21,408)
19,155
20
-
9
-
16
1,935
645
(1,938)
687
1,286
406
10,859
(2,270)
10,281
Participating non-controlling
interests - in operating
subsidiaries
Participating non-controlling
interests -in a holding subsidiary
- Redeemable/Exchangeable
units held by Brookfield
Preferred equity
(1)
-
-
-
-
-
728
-
-
-
-
2,062
-
2,062
2,865
-
-
-
-
-
2,865
728
Includes BRELP, BRP Bermuda Holdings I Limited (“Latam Holdco”), Brookfield BRP Holdings (Canada) Inc. (“NA Holdco”)
and Brookfield BRP Europe Holdings Limited (“Euro Holdco”).
Includes subsidiaries of Brookfield Renewable, other than BRP Equity, BREP Finance and other holding entities.
Includes elimination of intercompany transactions and balances necessary to present Brookfield Renewable on a
consolidated basis.
(2)
(3)
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 137
(MILLIONS)
For the year ended Dec 31, 2015
Revenues
Net income (loss)
For the year ended Dec 31, 2014
Revenues
Net income (loss)
For the year ended Dec 31, 2013
Revenues
Brookfield
Renewable
BRP
BREP Holding
Other Consolidating Renewable
Equity Finance Entities(1) Subsidiaries(2) adjustments(3) consolidated
Brookfield
$
$
$
- $
- $
- $
8 $
1,620 $
- $
1,628
2
-
(1)
(42)
235
(91)
103
- $
- $
- $
- $
1,704 $
- $
1,704
58
-
(1)
187
438
(479)
203
- $
- $
- $
- $
1,706 $
- $
1,706
69
-
-
234
486
(574)
215
Net income (loss)
(1)
(2)
(3)
Includes BRELP, Latam Holdco, NA Holdco and Euro Holdco.
Includes subsidiaries of Brookfield Renewable, other than BRP Equity, BREP Finance, and other holding entities.
Includes elimination of intercompany transactions and balances necessary to present Brookfield Renewable on a
consolidated basis.
See Note 15 – Long-term debt and credit facilities for additional details regarding the mid-term corporate
notes issued by BREP Finance. See Note 19 – Non-controlling interests for additional details regarding
Class A Preference Shares issued by BRP Equity.
29. SEGMENTED INFORMATION
Brookfield Renewable operates renewable power generating assets, which include conventional
hydroelectric facilities and wind facilities located in North America, Latin America and Europe. Brookfield
Renewable also operates three biomass facilities and two Co-gen facilities. Brookfield Renewable’s Chief
Executive Officer and Chief Financial Officer (collectively, the chief operating decision maker or “CODM”)
review the results of the business, manage operations, and allocate resources based on the type of
power generation (Hydroelectric, Wind, and Other, which includes Biomass and Co-gen).
Effective January 1, 2015, the geographies by which the Hydroelectric and Wind segments are further
evaluated and for which information is disclosed have changed in order to allow the CODM to more
effectively evaluate the business in a manner aligned with the continental operating platforms.
Accordingly, while information regarding the United States and Canada will continue to be disclosed in a
manner consistent with prior periods, these two segments have been further combined into the “North
America” segment. The “Latin America” segment includes the former Brazil segment, while the “Europe”
segment was not affected as a result of these changes.
In accordance with IFRS 8, Operating Segments, Brookfield Renewable discloses information about its
reportable segments based upon the measures used by the CODM in assessing performance. The
accounting policies of the reportable segments are the same as those described in Note 2 – Basis of
presentation and significant accounting policies. Brookfield Renewable analyzes the performance of its
operating segments based on revenues, Adjusted EBITDA, and Funds From Operations.
Adjusted EBITDA means revenues less direct costs (including energy marketing costs), plus Brookfield
Renewable’s share of cash earnings from equity-accounted investments and other income, before
interest, income taxes, depreciation, management service costs and the cash portion of non-controlling
interests.
Funds From Operations is defined as Adjusted EBITDA less interest, current income taxes and
management service costs, which is then adjusted for the cash portion of non-controlling interests and
distributions to preferred limited partners. For the year ended December 31, 2014, Funds From
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 138
Operations include the earnings received from the wind portfolio Brookfield Renewable acquired in
Ireland, reflecting its economic interest from January 1, 2014 to June 30, 2014. This amount represents
an acquisition price adjustment under IFRS 3, Business combinations but is included in Funds From
Operations for purposes of reporting operating results to Brookfield Renewable’s CODM.
Transactions between the reportable segments occur at fair value.
In August 2015, Brookfield Renewable announced the promotions of the President and Chief Operating
Officer to the Chief Executive Officer, and the Chief Executive Officer to the role of Executive Group
Chairman, Renewable Power for Brookfield Asset Management, which includes oversight of all of
Brookfield’s renewable investments. Accordingly, beginning on the date of the promotions, the CODM
includes the Chief Executive Officer and Chief Financial Officer who will evaluate Brookfield Renewable’s
results, manage its operations and allocate its resources by segment.
In January 2016 Brookfield Renewable, with its institutional partners, acquired a 57.6% controlling interest
in Isagen from the Colombian government. Beginning on the date of the acquisition, information
regarding Isagen will be provided to the CODM and accordingly the acquired business in Colombia will be
defined as a segment in the first quarter of 2016. For the year ended December 31, 2015, the “Latin
America” Hydroelectric and Wind segments are comprised solely of information related to Brookfield
Renewable’s power generating assets in Brazil.
The following segmented information is regularly reported to our CODM.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 139
(MILLIONS)
For the year ended
December 31, 2015:
Revenues
Adjusted EBITDA
Interest expense - borrowings
Funds From Operations prior to
Hydroelectric
Wind
Other(1) Corporate
Total
North America
Latin
North America
Latin
U.S.
Canada
Total
America
U.S.
Canada
Total
America
Europe
$ 698 $
453
(160)
305 $ 1,003 $
255
(62)
708
(222)
$
225
188
(24)
101 $
76
(33)
105 $
86
(30)
206 $
162
(63)
22 $
21
(9)
138 $ 34 $
103
(29)
14
(2)
- $ 1,628
1,177
(429)
(19)
(80)
non-controlling interests
287
193
480
153
43
56
99
11
75
11
(148)
681
Cash portion of non-controlling
interests
Funds From Operations
Depreciation
For the year ended
December 31, 2014:
Revenues
Adjusted EBITDA
Interest expense - borrowings
Funds From Operations prior to
non-controlling interests
Cash portion of non-controlling
interests
Funds From Operations
Depreciation
For the year ended
December 31, 2013:
Revenues
Adjusted EBITDA
Interest expense - borrowings
Funds From Operations prior to
non-controlling interests
Cash portion of non-controlling
interests
Funds From Operations
Depreciation
(1)
Includes biomass and Co-gen.
(87)
200
(200)
(3)
190
(82)
(90)
390
(282)
(17)
136
(125)
(23)
20
(53)
-
56
(58)
(23)
76
(111)
(6)
5
(9)
(43)
32
(80)
(5)
6
(9)
(30)
(178)
-
(214)
467
(616)
$ 719 $
493
(153)
394 $ 1,113 $
315
(70)
808
(223)
265 $
198
(19)
129 $
86
(39)
123 $
105
(38)
252 $
191
(77)
- $
-
-
45 $ 29 $
29
(9)
11
-
- $ 1,704
1,216
(415)
(21)
(87)
339
245
584
162
47
67
114
(83)
256
(159)
(2)
243
(82)
(85)
499
(241)
(13)
149
(143)
(34)
13
(63)
-
67
(72)
(34)
80
(135)
-
-
-
-
31
11
(159)
743
(13)
18
(25)
-
11
(4)
(38)
(197)
-
(183)
560
(548)
$ 677 $
473
(148)
399 $ 1,076 $
319
(64)
792
(212)
301 $
221
(23)
125 $
82
(38)
133 $
111
(44)
258 $
193
(82)
- $
-
-
- $ 71 $
-
-
23
-
- $ 1,706
1,208
(410)
(21)
(93)
322
255
577
181
44
67
111
(69)
253
(140)
-
255
(85)
(69)
508
(225)
(12)
169
(156)
(26)
18
(65)
-
67
(77)
(26)
85
(142)
-
-
-
-
-
23
(154)
738
-
-
-
-
23
(12)
(37)
(191)
-
(144)
594
(535)
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 140
The following table reconciles Adjusted EBITDA and Funds From Operations, presented in the above
tables, to net income as presented in the consolidated statements of income, for the year ended
December 31:
(MILLIONS)
Revenues
Other income(1)(2)(3)
Share of cash earnings from equity-accounted investments
Direct operating costs
Less: cash portion of non-controlling interests - other income(1)
Adjusted EBITDA
Fixed earnings adjustment(4)
Interest expense - borrowings
Management service costs
Current income tax expense
Less: distributions to preferred limited partners
Funds From Operations prior to non-controlling interests
Less: cash portion of non-controlling interests
Participating non-controlling interests - in operating
subsidiaries
Preferred equity
Funds From Operations
Add: cash portion of non-controlling interests(1)
Add: distributions to preferred limited partners
Less: fixed earnings adjustment
Depreciation
Unrealized financial instruments (loss) gain
Share of non-cash loss from equity-accounted investments
Deferred income tax recovery
Other
Notes
2015
2014
2013
10 $
1,628 $
1,704 $
1,706
23
11
24
5
15
10
16
20
19
19
19
20
12
9
11
16
4
122
20
(552)
(41)
10
26
(524)
-
11
21
(530)
-
1,177
1,216
1,208
-
(429)
(48)
(18)
(1)
681
(184)
(30)
467
255
1
-
(616)
(9)
(10)
78
(63)
11
(415)
(51)
(18)
-
743
(145)
(38)
560
183
-
(11)
(548)
10
(23)
29
3
-
(410)
(41)
(19)
-
738
(107)
(37)
594
144
-
-
(535)
37
(12)
18
(31)
Net income
(1)
215
In July 2015, Brookfield Renewable, along with its institutional partners, sold its interest in a 102 MW wind facility in California to
a third party for gross cash consideration of $143 million, resulting in a gain of $53 million. See Note 5 - Disposal of assets and
23 - Other income. Brookfield Renewable’s share of the gain was $12 million, representing the 22% interest in the facility and is
net of the cash portion of non-controlling interests.
In July 2015, concession agreements relating to two Brazilian hydroelectric facilities expired. Brookfield Renewable elected not
to renew these concession agreements in exchange for compensation of $17 million.
In 2015, Brookfield Renewable realized gains of $31 million on the settlement of foreign currency contracts. See Note 23 - Other
income.
203 $
103 $
$
(2)
(3)
(4) The fixed earnings adjustment relates to Brookfield Renewable’s investment in the acquisition of the wind portfolio in Ireland.
Pursuant to the terms of the purchase and sale agreement, Brookfield Renewable acquired an economic interest in the wind
portfolio from January 1, 2014. The transaction closed on June 30, 2014, and accordingly under IFRS, the $11 million net Funds
From Operations contribution was recorded as part of the purchase price.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 141
The following table presents information about Brookfield Renewable’s certain balance sheet items on a segmented basis:
(MILLIONS)
U.S.
Canada
Total
Hydroelectric
North America
Latin
America
North America
U.S.
Canada
Total
Latin
America
Europe
Wind energy
Other(1) Corporate
Total
As at December 31, 2015:
Property, plant and
equipment, at fair value
Total assets
Total borrowings
Total liabilities
For the year ended
December 31, 2015:
Additions to property, plant
and equipment
As at December 31, 2014:
Property, plant and
equipment, at fair value
Total assets
Total borrowings
Total liabilities
For the year ended
December 31, 2014:
$ 8,240
$ 4,879
$ 13,119
$ 1,728
$
894
$
893 $ 1,787
$
245 $ 1,201
$ 278
$
-
$ 18,358
8,645
5,095
13,740
1,954
2,721
954
4,238
1,988
3,675
6,226
207
311
975
459
576
920
504
708
1,895
963
1,284
267
105
108
1,312
315
24
19,507
618
838
34
76
1,736
7,338
1,901
10,744
68
49
117
373
7
3
10
318
347
284
-
1,449
$ 7,922
$ 5,168
$ 13,090
$ 2,120
$ 1,203
$ 1,137
$ 2,340
$
8,463
5,286
13,749
2,287
1,292
1,164
2,814
4,345
1,155
2,214
3,969
6,559
189
300
621
706
629
865
2,456
1,250
1,571
-
-
-
-
$
975
$
41
$
-
$ 18,566
1,108
43
206
19,849
583
747
-
1
1,687
7,678
1,790
10,968
Additions to property, plant
and equipment
(1)
Includes biomass and Co-gen.
1,415
40
1,455
19
10
17
27
-
1,129
-
-
2,630
The following information is about Brookfield Renewable’s equity accounted investments:
(MILLIONS)
U.S.
Canada
Total
Hydroelectric
North America
Latin
America
North America
U.S.
Canada
Total
Latin
America
Europe
Wind energy
Other Corporate
Total
As at December 31, 2015
As at December 31, 2014
$
$
106 $
177 $
60
56
$
$
166 $
233 $
24
38
$
$
-
-
$
$
-
-
$
$
-
-
$
$
-
-
$
$
7
2
$
$
-
-
$
$
-
-
$
$
197
273
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 142
30. COMMITMENTS, CONTINGENCIES AND GUARANTEES
Commitments
In the course of its operations, Brookfield Renewable and its subsidiaries have entered into agreements
for the use of water, land and dams. Payment under those agreements varies with the amount of power
generated. The various agreements are renewable and extend up to 2091.
In July 2015, Brookfield Renewable entered into an agreement to acquire two hydroelectric facilities in
Brazil with an aggregate capacity of 51 MW and expected to generate 293 GWh. Brookfield Renewable
completed this acquisition in January 2016; refer to Note 31 - Subsequent Events. Brookfield Renewable
will retain a 100% interest in these facilities.
In October 2015, Brookfield Renewable entered into an agreement to acquire two hydroelectric facilities
in Pennsylvania with an aggregate capacity of 292 MW. The facilities are expected to generate 1,109
GWh annually. Brookfield Renewable is pursuing this transaction with institutional partners, and is
expected to retain an approximate 40% controlling interest in the facilities. The transaction is expected to
close in the first quarter of 2016, subject to typical closing conditions.
In January 2016 Brookfield Renewable, with its institutional partners, acquired an approximate 57.6%
controlling interest in Isagen S.A. (“Isagen”) from the Colombian government; refer to Note 31 –
Subsequent Events. Brookfield Renewable’s initial economic interest in Isagen is 9% after accounting for
the non-controlling interests of its institutional partners. Following the closing of the acquisition Brookfield
Renewable and its institutional partners are required to conduct two tender offers with respect to the
remaining Isagen shares. If our consortium is successful in acquiring the remaining outstanding Isagen
shares, Brookfield Renewable’s interest in Isagen would then increase to approximately 23%.
The remaining development project costs on three Brazilian hydroelectric projects totaling 72 MW, a 55
MW biomass facility in Brazil, and a 14 MW wind project in Northern Ireland are expected to be $193
million. The biomass facility and the wind project are expected to be fully operational in 2016. Two
hydroelectric projects with a combined capacity of 53 MW are expected to be fully operational in 2017,
and the 19 MW hydroelectric project is expected to be fully operational in 2018. In the fourth quarter of
2015, Brookfield Renewable entered into a construction agreement in regards to a 15 MW wind
development project in Northern Ireland. Costs associated with the project are expected to be $30 million.
Construction is expected to commence in the first quarter of 2016.
As at December 31, 2015, Brookfield Renewable had commitments for future minimum lease payments
under non-cancellable leases which fall due as follows:
(MILLIONS)
2016
2017
2018
2019
2020
Thereafter
Total
Contingencies
$
$
24
22
20
20
18
191
295
Brookfield Renewable and its subsidiaries are subject to various legal proceedings, arbitrations and
actions arising in the normal course of business. While the final outcome of such legal proceedings and
actions cannot be predicted with certainty, it is the opinion of management that the resolution of such
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 143
proceedings and actions will not have a material impact on Brookfield Renewable’s consolidated financial
position or results of operations.
Brookfield Renewable, on behalf of Brookfield Renewable’s subsidiaries, and the subsidiaries themselves
have provided letters of credit, which include, but are not limited to, guarantees for debt service reserves,
capital reserves, construction completion and performance. The activity on the issued letters of credit by
Brookfield Renewable can be found in Note 15 – Long-term debt and credit facilities.
Brookfield Renewable along with institutional investors have provided letters of credit, which include, but
are not limited to, guarantees for debt service reserves, capital reserves, construction completion and
performance as it relates to interests in the Brookfield Americas Infrastructure Fund and the Brookfield
Infrastructure Fund II. As at December 31, 2015, letters of credit issued by Brookfield Renewable along
with institutional investors were $71 million (2014: $125 million).
Brookfield Renewable’s equity-accounted entities have similarly provided letters of credit, which include,
but are not limited to, guarantees for debt service reserves, capital reserves, construction completion and
performance. As at December 31, 2015, letters of credit issued by Brookfield Renewable’s equity-
accounted entities were $16 million (2014: nil).
Guarantees
In the normal course of operations, Brookfield Renewable and its subsidiaries execute agreements that
provide for indemnification and guarantees to third parties of transactions such as business dispositions,
capital project purchases, business acquisitions, and sales and purchases of assets and services.
Brookfield Renewable has also agreed to indemnify its directors and certain of its officers and employees.
The nature of substantially all of the indemnification undertakings prevents Brookfield Renewable from
making a reasonable estimate of the maximum potential amount that Brookfield Renewable could be
required to pay third parties as the agreements do not always specify a maximum amount and the
amounts are dependent upon the outcome of future contingent events, the nature and likelihood of which
cannot be determined at this time. Historically, neither Brookfield Renewable nor its subsidiaries have
made material payments under such indemnification agreements.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 144
31. SUBSEQUENT EVENTS
Acquisition of Isagen
In January 2016 Brookfield Renewable, with its institutional partners, acquired a 57.6% controlling interest
in Isagen from the Colombian government. Isagen is Colombia’s third-largest power generation company
and owns and operates a 3,032 MW portfolio, consisting predominantly of a portfolio of six, largely
reservoir-based, hydroelectric facilities. Annual generation is expected to approximate 15,000 GWh. In
addition, the portfolio includes approximately 3,800 MW of attractive medium to long-term development
projects providing further growth opportunity.
Aggregate consideration was approximately $2.0 billion (COP 6.7 trillion) for the initial 57.6% interest.
Brookfield Renewable’s initial investment is $225 million for a 9% economic interest in Isagen after
accounting for the non-controlling interests of its institutional partners. Brookfield Renewable is the
general partner of and effectively controls the entity that acquired the 57.6% interest in Isagen.
Following the closing of the acquisition Brookfield Renewable and its institutional partners are required to
conduct two mandatory tender offers (collectively, the “MTO”) with respect to the remaining Isagen
shares. If our consortium is successful in acquiring all of the remaining outstanding Isagen shares, a
further approximately $1.4 billion (COP 4.8 trillion) would be invested. Brookfield Renewable’s interest in
Isagen would then increase to approximately 23% and a further approximate $400 million of equity would
be invested.
The aggregate consideration for the initial 57.6% interest and the aggregate tender offer is or is
anticipated to be financed as follows:
(MILLIONS)
Non-recourse borrowings
Equity
Non-controlling interests
Brookfield Renewable
Initial
57.6%
MTO
42.4%
$
510 $
240 $
1,244
225
806
400
100%
750
2,050
625
$
1,979 $
1,446 $
3,425
In association with the Isagen acquisition, Brookfield Renewable and its institutional partners secured
financing in the amount of $750 million of which $510 million was drawn to partially fund the initial 57.6%
interest. The loan bears interest at a floating interest rate of LIBOR plus a margin of 250 basis points and
matures in January 2021. Brookfield Renewable also secured a one-year, $500 million, non-revolving
corporate credit facility. The terms of this credit facility are consistent with the terms of our corporate
credit facilities and the applicable margin is 1.20%.
The estimated fair values of the assets acquired and liabilities assumed will be disclosed in the Q1 2016
interim report and financial statements with final figures expected within 12 months of the acquisition
date.
Acquisition of Brazil hydroelectric facilities
In January 2016, Brookfield Renewable completed the acquisition of two hydroelectric facilities in Brazil.
The aggregate capacity of the two facilities is 51 MW, and annual generation is expected to be 293 GWh.
Brookfield Renewable will retain a 100% interest in the facilities.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 145
Equity transactions
In February 2016, Brookfield Renewable announced the completion of the Exchange Offer for the
exchange of Series 5 Preference Shares for Series 5 Preferred LP Units. A total of 2,885,496 Series 5
Preference Shares were tendered and exchanged for an equal number of Series 5 Preferred LP Units.
Distribution increase
In February 2016, Brookfield Renewable announced an increase in LP Unitholder distributions to $1.78
per LP Unit on an annualized basis, an increase of 12 cents per LP Unit, to take effect with the first
2016.
quarter
distribution
payable
March
in
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2015
Page 146
GENERAL INFORMATION
Corporate Office
73 Front Street
Fifth Floor
Hamilton, HM12
Bermuda
Tel: (441) 294-3304
Fax: (441) 516-1988
www.brookfieldrenewable.com
Officers of Brookfield
Renewable Energy Partners
L.P.’s Service Provider, BRP
Energy Group L.P.
Richard Legault
Executive Group Chairman
Harry Goldgut
Group Chairman
Sachin Shah
Chief Executive Officer
Nicholas Goodman
Chief Financial Officer
Transfer Agent & Registrar
Computershare Trust Company
of Canada
100 University Avenue
9th floor
Toronto, Ontario, M5J 2Y1
Tel Toll Free: (800) 564-6253
Fax Toll Free: (888) 453-0330
www.computershare.com
Directors of the General Partner of
Brookfield Renewable Energy Partners L.P.
Jeffrey Blidner
Eleazar de Carvalho Filho
John Van Egmond
David Mann
Lou Maroun
Patricia Zuccotti
Lars Josefsson
Exchange Listing
NYSE: BEP (LP Units)
TSX: BEP.UN (LP Units)
TSX: BEP.PR.E (Preferred LP Units – Series 5)
TSX: BEP.PR.G (Preferred LP Units – Series 7)
TSX: BRF.PR.A (Preferred shares – Series 1)
TSX: BRF.PR.B (Preferred shares – Series 2)
TSX: BRF.PR.C (Preferred shares – Series 3)
TSX: BRF.PR.E (Preferred shares – Series 5)
TSX: BRF.PR.F (Preferred shares – Series 6)
Investor Information
Brookfield
Renewable
Visit
at
www.brookfieldrenewable.com for more information.
The 2015 Annual Report and Form 20-F is also
available online. For detailed and up-to-date news
and information, please visit the News Release
section.
online
Additional financial information is filed electronically
with various securities regulators in United States
and Canada through EDGAR at www.sec.gov and
through SEDAR at www.sedar.com.
Shareholder enquiries should be directed to the
Investor Relations Department at (416) 359-1955 or
unitholderenquiries@brookfieldrenewable.com
NYSE:
BEP
TSX:
BEP.UN
www.brookfieldrenewable.com