2 0 1 6 A N N U A L R E P O R T
Brookfield Renewable
Partners L.P.
OUR OPERATIONS
We manage our facilities through operating platforms in North America, Colombia, Brazil, and
Europe which are designed to maintain and enhance the value of our assets, while cultivating positive
relations with local stakeholders. We own and operate 217 hydroelectric generating stations, 38 wind
facilities, four biomass facilities and three natural gas-fired (“Co-gen”) plants. Overall, the assets we own
or manage have 10,731 megawatts (“MW”) of capacity, over 6,000 MW development pipeline and long-
term average (“LTA”) generation of 41,697 gigawatt hours (“GWh”). The table below outlines our portfolio
as at December 31, 2016:
River
Systems
Capacity(1)
(MW)
LTA(1)(2)
(GWh)
Storage
(GWh)
Facilities
Hydroelectric(3)
North America(4)
Colombia(5)
Brazil(6)
Wind(3)(7)
North America
Europe
Brazil
Other(8)
50
6
26
82
-
-
-
-
-
82
170
6
41
217
10
23
5
38
7
262
4,847
2,732
872
8,451
840
600
150
1,590
690
10,731
17,694
14,476
4,555
36,725
2,310
1,553
588
4,451
521
41,697
4,879
3,703
-
8,582
-
-
-
-
-
8,582
(1)
(2)
(3)
(4)
(5)
(6)
Includes 100% of capacity and generation from assets we manage.
LTA is calculated on a consolidated and an annualized basis from the beginning of the year, regardless of the acquisition or
commercial operation date.
For information on changes to our reporting segments see “PART 9 – Presentation to Stakeholders and Performance
Measurement”.
North America 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.
Colombia 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 20 years. Colombia includes generation from both hydroelectric and
Co-gen facilities. See “PART 9 - Presentation to Stakeholders and Performance Measurement”.
Hydroelectric assets located in Brazil benefit from a market framework which levelizes generation risk across producers. See
“PART 9 - Presentation to Stakeholders and Performance Measurement”.
(7) Wind LTA is the expected average level of generation, as obtained from the results based on simulated historical wind speed
(8)
data performed over a period of typically 10 years.
Includes one Co-gen plant in Colombia (300 MW), two Co-gen plants in North America (215 MW) and four biomass facilities
in Brazil (175 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 “PART 10 - Cautionary Statements”. We make use of non-IFRS measures in this
Annual Report - see “PART 10 - Cautionary Statements”. 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 https://bep.brookfield.com, on the SEC’s website
at www.sec.gov or on SEDAR’s website at www.sedar.com.
LETTER TO UNITHOLDERS
We achieved a total return of 20% for shareholders in 2016, deployed approximately $1 billion of equity
into hydro-based growth initiatives, advanced 300 megawatts of projects through construction and late
stage development, and expanded our reach into a number of new geographies. Looking ahead, we see
a continued positive investment environment in all our markets and believe that our patient approach to
acquiring wind and solar assets over the last five years is starting to bear fruit and will lead to significant
step changes in the business over time.
Operations Update
We reported Adjusted EBITDA of $1.5 billion and FFO of $419 million during 2016. We experienced low
water levels during the year so if we assumed normalized generation, we would have achieved $1.6
billion and $527 million of cash flows, respectively.
Our assets in North America continue to perform at industry-leading availability rates. Inflows in the
United States were below average in 2016, disproportionately impacting results. However, our Canadian
portfolio performed in line with the long term average, mitigating the overall impact. Over the last ten
years, generation from our North American portfolio has been within 1% of the long-term average.
Generation variability is a normal part of our business, however this year was particularly impacted by low
water levels at 100% owned assets with strong PPA rates. As always, we manage our operations, capital
plans and growth based on how the business performs over the long-term and as result, we are able to
continue to grow the business while maintaining a strong balance sheet and healthy liquidity position.
Our European wind assets recorded strong performance in 2016, with production at 95% of the long-term
average. We have also continued to progress our power marketing business in Europe. We entered a
power supply agreement with Facebook in 2016 and are in advanced discussions with other major global
companies to supply them with green energy. We are nearing completion of the implementation of a wind
farm monitoring system which would enable us to further enhance results by optimizing turbine
performance and minimizing downtime. We are also advancing with the potential sale of approximately
130 megawatts of contracted wind farms from our Irish portfolio.
These projects were part of the development pipeline that we secured during our acquisition of the 700
megawatt Bord Gais portfolio in 2014. We subsequently advanced these projects through construction,
secured long-term power contracts and non-recourse project financing, and are now looking to monetize
a portion of the portfolio and recycle capital into higher yielding opportunities. When we acquired this
portfolio, Ireland was a market under significant financial pressure with weak growth and looking to repay
EU and IMF debt. Since that time, the Irish economy has rebounded strongly, with unemployment
declining sharply from 12% at the end of 2013 to 7.2% at the end of 2016. Real GDP is estimated to have
grown by 3.8% in 2016, and we believe it will continue to outperform the broader Eurozone. Accordingly,
we believe we can sell select assets from our Irish portfolio at very compelling returns and recycle most of
the capital we invested.
In Brazil, our operations continue to do well, with hydrological conditions continuing to improve and wind
generation exceeding the long-term average. We continue to see gradual improvement in the Brazilian
economy which we expect to be reflected in rising power demand and wholesale market prices.
Accordingly, we are being patient and looking for opportunities to capture premium pricing for the
uncontracted portion of our output. We continue to engage many commercial and industrial customers
seeking contracting opportunities and over the course of the last year signed 15 contracts for the sale of
power at prices in the R$200-R$270 per megawatt hour range for the next two to three years.
It has been a year since we made our initial investment in Colombia, acquiring a controlling stake in the
3,000 megawatt Isagen portfolio. We are extremely pleased with the quality of the assets, the
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 1
management and operating teams, and are working together to optimize the business going forward. In
our first full year of operations, we were able to increase our group’s ownership to 100% and have started
the process of delisting the company from the Colombian stock exchange. Results have modestly
exceeded the company’s budget and our underwriting expectations, and as a nice surprise, our team has
been advancing 100 megawatts of hydro development from the pipeline we secured and have conviction
that the development pipeline will provide further opportunities to grow. Our objectives going forward are
focused on enhancing the operations and surfacing efficiencies which we believe will add to the value of
this portfolio over the long run.
Development
As we look forward to 2017, we have 300 megawatts of assets under construction or in late stage
development representing an additional $700 million of growth capital ($240 million of which is our share)
that should contribute an incremental $45 - $50 million to Funds From Operations when commissioned.
These projects are spread across North America, South America and Europe and all target high-teen
returns on invested capital. Approximately 80 megawatts relate to wind projects in Europe with the
balance being hydro in North and South America. Currently, 150 megawatts of these projects are under
construction and scheduled to be commissioned by the end of 2018.
All projects under construction are progressing on scope, schedule and budget. In Brazil, we recently
commissioned a 25 megawatt hydro facility and continue with the construction of two other hydro
projects, totalling 47 megawatts. In Europe, we continue to advance two wind projects totaling 43
megawatts in Ireland, and are also moving our first 19 megawatts of wind in Scotland and a further 19
megawatt wind project in the Republic of Ireland towards the construction phase.
Finally, in the fourth quarter we agreed to acquire two early-stage, greenfield solar development projects
representing an aggregate 120 megawatts. These projects will allow us to replenish our pipeline and
continue to deliver strong organic growth to the business.
Balance Sheet and Liquidity
We maintained high levels of liquidity throughout the year and ended 2016 with approximately $1.2 billion
of available liquidity. In 2016, we successfully accessed the debt and equity capital markets, raising $1.2
billion in new funding and completing over $2.7 billion in non-recourse financings. This included
successfully refinancing all of our outstanding 2016 debt maturities. We have extended the duration of our
debt portfolio and locked in rates in this continued low interest rate environment. With our financings
predominantly locked in at fixed rates, and with a weighted average duration of approximately nine years
on a proportionate basis, we are well insulated from interest rate fluctuations.
Investment Environment
Hydro, wind and solar portfolios continue to trade hands at premium valuations across our core markets.
The levels at which these assets are transacting speaks to the continued value proposition of renewables
while highlighting the intrinsic value of our own portfolio. We continue to identify a range of new
investment opportunities with strong return potential and where we possess competitive advantages.
Accordingly, we are focused on opportunities that require operating and development expertise, access to
large-scale capital, restructuring capabilities and a long term counter-cyclical investment approach.
During the year, there were a considerable number of developments in our sector that we believe will
position the business positively for continued growth.
North America
The U.S. election outcome has highlighted a number of issues in the renewable power sector that could
evolve over the next four years. This includes the potential cancellation of the Clean Power Plan,
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 2
breaking away from global initiatives to establish carbon targets (i.e., the Paris Agreement), and cutting
federal subsidies for wind and solar. We do not believe the first two changes will have a meaningful
impact on our business as renewable policy is largely set at the state level and participating in global
initiatives such as the Paris Agreement will not change the long term trend of decarbonisation.
Reductions or cuts to federal subsidies for wind and solar however, could change the investment
prospects for these assets, making them more attractive to investors like ourselves, at the expense of low
cost of capital financial or tax-driven investors who were previously actively pursuing these assets.
At present, federal subsidies for wind and solar are expected to diminish by 2021 and 2022, respectively,
unless policy makers decide to extend them as they have in the past. These subsidies have generally
had the effect of providing additional compensation to an asset class that was not naturally competitive,
and therefore facilitated the replacement of thermal coal generation with non-carbon emitting
technologies. For example, it was only a few years ago when installed utility-scale PV solar costs
exceeded $3 per watt, prior to incentives. Today, utility-scale PV solar costs have declined to
approximately $1.10 - $1.20 per watt in the U.S., making the technology cost competitive with traditional
thermal generation (i.e., “grid-parity”) meaning that federal subsidies are not needed as much as they
used to be.
Looking ahead, we believe that installed solar costs will continue to decrease, trending into the range of
$1 per watt by the end of the decade. This is relevant for two reasons. First, as discussed above, it will
mean that even without politics, subsidies will likely naturally fade away. Second, without subsidies,
investors who will generate the greatest risk-adjusted returns will be those who can enhance margins
through operational expertise rather than chasing government incentives. It is in that environment that we
are best suited to invest capital and as a result, we expect wind and solar to be areas of strong future
growth for us and a natural extension of our generation diversification strategy.
Given our patient approach, and our view that the market is moving in our favour, we have spent the
better part of the last two years looking at a number of wind and solar opportunities to begin our growth
into these areas. One such opportunity which materialized from capital market volatility and balance sheet
stress was TerraForm Power. Over the last year, we and our partners acquired a 34% stake in the public
float of TerraForm Power as its sponsor SunEdison filed for bankruptcy protection. TerraForm Power and
its sister company TerraForm Global own and operate nearly 4,000 megawatts of contracted wind and
solar assets across the globe, with the bulk of the assets located in North America.
We are currently working with the Board and management of both Terraform companies under an
exclusivity arrangement, to help the companies, their employees and all stakeholders move forward with
a growing, viable business once again. We believe these companies, partnered with Brookfield, can
stabilize their operations, strengthen their balance sheets, restore access to capital and commence
growing again, in what we believe will be an improved investment environment for operationally focused
and broadly diversified power companies.
South America
We continue to see gradual improvement in the Brazilian economy. The pace of the GDP contraction has
slowed, and we believe the economy will resume growth in 2017. In addition, monetary policy is easing as
inflation comes under control and investment is now starting to take hold. From a power market
perspective, we expect demand to begin rising again at approximately 1% - 1.5% annually and wholesale
market prices to continue to rebound. Current spot power prices range from R$130/MWh – R$160/MWh
versus the lows of approximately R$50/MWh reached in early 2016. With the currency still weak and
capital scarce, we continue to see a very attractive investment environment in the country.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 3
In Colombia, the government has begun implementation of a revised peace agreement with the FARC
that should further improve the security environment, and accelerate investment and growth. While GDP
growth has slowed recently, it remains positive despite the low oil price environment as a result of the
country’s strong economic foundation. Inflation has fallen sharply recently, which will support continued
interest rate cuts, stimulate demand and boost investment.
Europe
We continue to look for tuck in wind, solar and hydro opportunities in Europe to take advantage of our
operating scale in that market. Returns for operating assets continue to reflect the very low rate
environment and as a result, we are focused on our wind development pipeline and opportunities that
require substantial operating expertise.
Dividend Increase
Our board has declared a dividend increase which brings our annual payout to $1.87 per unit. In light of
the significant potential growth in front of us, we have increased the dividend by 5% and will assess our
dividend rate throughout the year based on the success of some of our near-term growth initiatives.
Outlook
As we start 2017, we are well positioned to grow the business in a prudent manner with a focus on the
long term. Accordingly, our strategy remains the same ─ to deliver 12%-15% total shareholder returns on
a per-share basis over time.
On a final note, I would like to express my sincere appreciation to our employees, directors, shareholders
and many business partners for their contributions to our success. We are looking forward to the
opportunities that 2017 will bring and we thank you for your continued support.
Sincerely,
Sachin Shah
Chief Executive Officer
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 4
OUR COMPETITIVE STRENGTHS
Brookfield Renewable Partners L.P. ("Brookfield Renewable") is the owner and operator of a
diversified portfolio of high quality assets that generate electricity from renewable resources.
Our business model is to utilize our global reach to identify and acquire or develop 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
stable, attractive, long-term total returns for the benefit of our shareholders.
One of the largest pure play renewable platforms. We own one of the world’s largest publicly
traded, pure play renewable power portfolios with approximately $28 billion in assets under management,
10,731 MW of installed capacity and over 6,000 MW development pipeline. Annualized long-term average
generation on a proportionate basis is 23,542 GWh. Our portfolio includes 217 hydroelectric generating
stations on 82 river systems, 38 wind facilities and four biomass facilities, diversified across 15 power
markets in North America, Colombia, Brazil and Europe.
The following charts illustrate annualized long-term average generation on a proportionate basis,
adjusting for the share from facilities in which we own less than a 100% interest:
Source of Energy
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 and Colombian assets have the ability to store water in reservoirs
approximating 27% of their annualized long-term average generation. Our assets in Brazil benefit from a
framework that levelizes generation risk across hydroelectric producers. The ability to store water in
reservoirs in North America and Colombia as well as 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 renewable power generators, providing
significant scarcity value to investors.
Stable, high quality cash flows with attractive long-term value for LP 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 91% of our 2017 proportionate generation
output is contracted to public power authorities, load-serving utilities, industrial users or to affiliates of
Brookfield Asset Management. The power purchase agreements have a weighted-average remaining
duration of 16 years (on a proportionate basis), providing long-term cash flow visibility.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 5
Strong financial profile. With approximately $28 billion of assets under management, our debt
to total capitalization is 38% and approximately 78% 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 December 31, 2016 included
approximately $1.2 billion of cash and cash equivalents, available-for-sale securities and the available
portions of credit facilities.
Well positioned for cash flow growth. We have strong organic growth prospects with over
6,000 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 uncontracted portion of our
operating portfolio. Our organic growth is complemented by our strong acquisition capabilities. Over the
last ten years, we have acquired or commissioned 81 hydroelectric facilities totaling approximately 5,000
MW, 38 wind facilities totaling approximately 1,500 MW, four biomass facilities totaling 175 MW and one
300 MW Co-gen plant. For the year ended December 31, 2016, we integrated hydroelectric, wind,
biomass and Co-gen facilities with a capacity of approximately 3,450 MW. 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 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 a
sustainable 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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 6
Management’s Discussion and Analysis
For the year ended December 31, 2016
This Management’s Discussion and Analysis for the year ended December 31, 2016 is provided
as of February 28, 2017. Unless the context indicates or requires otherwise, the terms “Brookfield
Renewable”, “we”, “us”, and “our” mean Brookfield Renewable Partners L.P. and its controlled entities.
Brookfield Renewable changed its name from Brookfield Renewable Energy Partners L.P. to Brookfield
Renewable Partners L.P. on May 3, 2016. 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.
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.
References to $, C$, €, R$, £ and COP are to United States (“U.S.”) dollars, Canadian dollars,
Euros, Brazilian reais, British pound sterling and Colombian pesos, respectively. Unless otherwise
indicated, all dollar amounts are expressed in U.S. dollars.
For a description on our operational and segmented information and the non-IFRS financial
measures we use to explain our financial results, see – “PART 9 - Presentation to Stakeholders and
Performance Measurement”. For a reconciliation of the non-IFRS financial measures to the most
comparable IFRS financial measures, see – “PART 2 - Financial Performance Review” and “PART 5 –
Proportionate Information”. This Annual Report contains forward looking information within the meaning of
U.S. and Canadian securities laws. Refer to – “PART 10 - Cautionary Statements” for cautionary
statements regarding forward-looking statements and the use of non-IFRS measures. Our Annual Report
and additional information filed with the Securities Exchange Commission (“SEC”) and with securities
regulators in Canada are available on our website (https://bep.brookfield.com), the SEC’s website
(www.sec.gov), or on SEDAR (www.sedar.com).
Organization of the Management’s Discussion and Analysis
PART 1 – 2016 Highlights
8 PART 5 - Proportionate Information
PART 2 – Financial Performance Review
Generation and financial review for the year
ended December 31, 2016
Generation and financial review for the year
ended December 31, 2015
Contract profile
PART 3 – Liquidity and Capital Resources
Capitalization, long-term borrowings and
available liquidity
Consolidated statements of cash flows
Shares and units outstanding
Dividends and distributions
Contractual obligations
Off-statement of financial position arrangements
PART 4 – Additional Financial Information
Property, plant and equipment
Related party transactions
Equity
Generation and financial review by segments
Long-term debt and credit facilities
11
PART 6 - Selected Annual and Quarterly Information
19 Historical operational and financial information
Summary of historical quarterly results
26 Fourth quarter review
PART 7 - Business Risks and Risk Management
Risk management and financial instruments
27 Risk factors
30
31 PART 8 - Critical Estimates, Accounting Policies
32 and Internal Controls
32
33 PART 9 - Presentation to Stakeholders and
Performance Measurement
34 PART 10 - Cautionary Statements
34
35
37
39
40
41
42
45
48
57
63
66
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 7
PART 1 – 2016 HIGHLIGHTS
YEAR ENDED DECEMBER 31
2016
2015
7,284
10,731
(MILLIONS, EXCEPT AS NOTED)
Operational information:
Capacity (MW)
Total generation (GWh)
Long-term average generation
Actual generation
Average revenue ($ per MWh)
Proportionate generation (GWh)
Long-term average generation
Actual generation
Average revenue ($ per MWh)
Selected financial information:
Revenues
1,628
Adjusted EBITDA(1)
1,177
Funds From Operations(1)
467
Adjusted Funds From Operations(1)
407
103
Net income
Funds From Operations per LP Unit(1)(2)
1.69
Distribution per LP Unit
1.66
(1) Non-IFRS measures. See “PART 2 - Financial Performance Review”, “PART 5 - Proportionate Information”, “PART 9 -
2,452 $
1,487
419
352
40
1.45
1.78
19,317
17,662
71
25,543
23,332
70
22,898
20,222
71
39,948
34,071
72
$
Presentation to Stakeholders and Performance Measurement” and “PART 10 - Cautionary Statements”.
(2) For the year ended December 31, 2016, weighted average LP Units, Redeemable/Exchangeable partnership units and GP
interest totaled 288.7 million (2015: 275.6 million).
AS AT DECEMBER 31
(MILLIONS, EXCEPT AS NOTED)
Liquidity and Capital Resources
Available liquidity
Debt to capitalization
Borrowings non-recourse to Brookfield Renewable
Corporate borrowings
Average debt term to maturity
Average interest rate
Subsidiary borrowings on a proportionate basis
Average debt term to maturity
Average interest rate
2016
2015
$
1,191 $
38%
78%
1,228
39%
76%
7.4 years
4.5%
6.5 years
5.0%
9.6 years
6.2%
9.6 years
5.6%
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 8
Operating Results
For the year ended December 31, 2016, proportionate generation from our hydroelectric and wind
portfolios was consistent with the same period of the prior year. In our hydroelectric portfolio, strong
hydroelectric generation in Louisiana, Ontario and Quebec was offset by lower generation in Brazil and
the Northeastern United States. In our wind portfolio, strong generation in the United States and Brazil
was offset by lower generation in Canada and Europe. The Colombian portfolio finished the year with a
strong fourth quarter and has been performing in line with expectations. The incremental generation from
the assets acquired and commissioned during the current year and a full year’s contribution from facilities
acquired and commissioned in 2015 was 2,830 GWh and 142 GWh, respectively.
Revenues totaling $2,452 million represent an increase of $824 million over the prior year. In our
North America hydroelectric and wind portfolios, revenues were impacted by relatively lower merchant
power prices, primarily in the Northeastern United States, which was partially offset by revenues from
stronger generation from our facilities with higher relative pricing for a combined negative impact of $5
million. Hydrology and wind conditions improved in Brazil, however, this was offset by relatively lower
merchant power prices which impacted revenues by $16 million. The appreciation of the U.S. dollar
impacted revenues by $27 million. The growth in our portfolio contributed $882 million with most of this
coming from our business in Colombia.
Growth and Development
Acquisitions
Controlling interests in a total of 3,347 MW of operating and development projects, with an
expected annualized long-term average generation of approximately 16,000 GWh, were acquired along
with our institutional partners as follows:
• 3,032 MW portfolio in Colombia, predominantly consisting of largely reservoir-based hydroelectric
facilities, with annualized long-term average generation of approximately 15,000 GWh annually.
Isagen S.A. E.S.P. (“Isagen”) is Colombia’s third-largest power generation company and we
retain an approximate 24% interest
• 296 MW hydroelectric portfolio in Pennsylvania with expected annualized long-term average
generation of 1,109 GWh. We retain an approximate 28.6% interest
• 19 MW wind development project in Ireland with expected annualized long-term average
generation of 63 GWh with commissioning expected in 2018. We retain an approximate 40%
interest
We also acquired a 51 MW hydroelectric portfolio in Brazil with an expected annualized long-term
average generation of 293 GWh. We retain 100% interest in this portfolio.
Construction and development
We achieved full commissioning of a 14 MW wind facility in Ireland with annualized long-term
average generation of 37 GWh. We substantially commissioned a 55 MW biomass facility in Brazil with
annualized long-term average generation of 202 GWh. Subsequent to year-end, we also commissioned a
25 MW hydroelectric facility in Brazil with annualized long-term average generation of 129 GWh. All of
these facilities were commissioned on scope, schedule and budget.
We initiated construction on a 28 MW wind facility in Ireland with an expected annualized long-
term average generation of 96 GWh with commissioning expected in third quarter of 2017.
We continue to advance the construction, on scope, schedule and budget, of 47 MW of
hydroelectric development projects in Brazil and a 15 MW wind project in Northern Ireland. The Brazil
and Northern Ireland projects have expected annualized long-term average generation of 294 GWh and
46 GWh, respectively, with commissioning expected between 2017 and 2018.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 9
Long-term debt and credit facilities
•
Increased the available amount of our corporate credit facilities from $1,560 million to $1,690
million and extended the maturity to June 30, 2021
•
Issued C$500 million ($383 million) of corporate medium-term notes
• Completed over $2.7 billion in project financings across our portfolio
Equity transactions
• Completed a limited partnership unit (“LP Unit”) offering, including an over-allotment option, with
Brookfield Asset Management purchasing additional LP Units, for aggregate gross proceeds of
C$860 million ($672 million). Brookfield Asset Management owns, directly and indirectly,
approximately 61% of Brookfield Renewable on a fully-exchanged basis
•
Issued preferred limited partnership units (“Preferred LP Units”) for gross proceeds of C$200
million ($152 million)
• Completed an exchange of 2,885,496 Preference Shares for an equal number of newly issued
Preferred LP Units
Distribution increases
•
•
In February 2016, increased LP Unitholder distributions to $1.78 per unit on an annualized basis,
an increase of 12 cents per LP Unit
In February 2017, announced an increase in LP Unitholder distributions to $1.87 per LP Unit on
an annualized basis, an increase of nine cents per LP Unit, to take effect with the first quarter
distribution payable in March 2017
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 10
PART 2 – FINANCIAL PERFORMANCE REVIEW
GENERATION AND FINANCIAL REVIEW FOR THE YEAR ENDED DECEMBER 31, 2016
The following chart reflects the actual and long-term average generation in GWh for the year
ended December 31:
Actual Generation
LTA Generation
Actual vs. LTA
Prior Year
2016
2015
2016
2015
2016
2015
Variance of Results
Actual vs.
15,252
14,938
17,345
16,540
10,600
-
13,221
-
3,792
3,691
4,528
4,024
(2,093)
(2,621)
(736)
(1,602)
314
-
10,600
(333)
101
29,644
18,629
35,094
20,564
(5,450)
(1,935)
11,015
1,876
1,443
639
1,952
1,551
447
2,310
1,531
588
2,464
1,493
442
3,958
3,950
4,429
4,399
469
753
425
580
(434)
(88)
51
(471)
44
(512)
58
5
(449)
173
(76)
(108)
192
8
(284)
GENERATION (GWh)
Hydroelectric
North America(1)
Colombia
Brazil
Wind
North America(2)
Europe
Brazil
Other
Total
(1)
23,332
34,071
10,739
Includes actual generation and long-term average generation for United States of 9,899 GWh and 12,172 GWh, respectively
(2015: 10,128 GWh and 11,367 GWh, respectively) and for Canada of 5,353 GWh and 5,173 GWh, respectively (2015: 4,810
GWh and 5,173 GWh, respectively).
Includes actual generation and long-term average generation for United States of 907 GWh and 1,113 GWh, respectively (2015:
936 GWh and 1,267 GWh, respectively) and for Canada of 969 GWh and 1,197 GWh, respectively (2015: 1,016 GWh and
1,197 GWh, respectively).
39,948
25,543
(5,877)
(2,211)
(2)
See – “PART 9 - Presentation to Stakeholders and Performance Measurement” for information on
long-term average, our participation in a Brazilian hydroelectric balancing pool and our performance
measurement. See “PART 5 – Proportionate Information” for the actual and long-term average generation
for the year ended December 31 on a proportionate basis.
The hydroelectric portfolio generated 29,644 GWh, below the long-term average of 35,094 GWh
and an increase of 11,015 GWh compared to the prior year. In North America, lower hydrology across the
Northeastern United States compared to the prior year was partly offset by above long-term average
generation from our facilities in Canada and Louisiana. In Brazil, generation was higher than prior year
due to improved hydrology conditions. The 10,600 GWh contribution from Colombia relates to the
generation from our Isagen portfolio that was purchased at the end of January 2016. The contribution
from the other growth in our portfolio and incremental generation from a full year’s contribution from
assets acquired last year was 946 GWh.
The wind portfolio generated 3,958 GWh, below the long term average of 4,429 GWh and
consistent with prior year generation of 3,950 GWh. Our facilities continue to perform at high reliability
and availability rates. Generation was impacted by the wind resource in our various geographies with
increased generation in the United States and Brazil being partially offset by lower generation in Europe
and Canada. The incremental generation from a full year’s contribution from assets acquired last year
and assets commissioned in the current year was 129 GWh. Generation from the prior year includes 125
GWh relating to a facility sold in the third quarter of 2015.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 11
The following table presents selected financial information 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)
Management service costs
Interest expense – borrowings
Current income tax
Distributions to preferred limited partners
Cash portion of non-controlling interests
(184)
Participating non-controlling interests - in operating subsidiaries
(30)
Preferred equity
Funds From Operations(1)
467
(1) Non-IFRS measures. See “PART 5 – Proportionate Information”, “PART 9 - Presentation to Stakeholders and Performance
2016
2,452
64
9
(1,038)
1,487
(62)
(606)
(44)
(15)
2015
1,628
81
20
(552)
1,177
(48)
(429)
(18)
(1)
(316)
(25)
419
$
$
Measurement” and “PART 10 - Cautionary Statements”.
Revenues totaling $2,452 million represent an increase of $824 million.
Relatively lower merchant power prices primarily in the Northeastern United States were partially
offset by the annual escalations in our power purchase agreements and contributions from facilities with
higher relative pricing for a $10 million net impact to revenues. At our Brazilian hydroelectric portfolio,
relatively lower merchant power prices, caused by improved hydrology, were partially offset by stronger
generation for a net impact of $24 million.
The appreciation of the U.S. dollar, compared to same period of the prior year, resulted in a $27
million decrease in revenues. This also affected operating and borrowing costs and after taking into
account the effect of our ongoing foreign currency hedging program, reduced the net impact on Funds
From Operations to $23 million.
The contribution to revenues from the growth in our portfolio and incremental generation from a
full year’s contribution from assets acquired last year was $865 million and $17 million, respectively, for a
total of $882 million.
Revenues in the current year include a $20 million settlement pertaining to the price escalator for
power sold under power purchase agreements in Ontario and $6 million in proceeds from a wake impact
agreement with neighboring wind facilities in California.
Revenues in 2015 included $10 million from the settlement of matters related to the delayed
completion of a hydroelectric facility in Brazil. In addition, revenues relating to a wind facility sold in the
third quarter had contributed $13 million. The sale resulted in a total gain of $53 million with Brookfield
Renewable’s share, net of non-controlling interests, of $12 million included in Other income.
The average total revenue per MWh was $72, an increase of $2 per MWh over the prior year
primarily due to the contributions from our recently acquired assets with relatively higher revenue per
MWh and an increase in generation from assets with higher relative contract pricing.
Other income totaling $64 million includes gains on the settlement of foreign currency hedging
contracts and interest income from higher cash balances.
Share of cash-earnings from our equity-accounted investments decreased primarily due to lower
prices and the costs associated with financing initiatives for an impact of $11 million.
Direct operating costs totaling $1,038 million represent an increase of $486 million primarily
attributable to the growth in our portfolio.
Management service costs totaling $62 million represent an increase of $14 million, primarily
attributable to the growth in our capitalization value.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 12
Interest expense totaling $606 million represents an increase of $177 million which was largely
attributable to the growth in our portfolio.
Current income tax totaling $44 million represents an increase of $26 million, primarily relating to
the acquisition in Colombia.
Distributions to holders of Preferred LP Units and Preferred shares totaling $40 million represent
an increase of $9 million. The increase is related to the recent issuances of Preferred LP Units in the
current year and in November of 2015.
The cash portion of participating non-controlling interests – in operating subsidiaries totaling $316
million includes a $173 million contribution from the growth in our portfolio.
Funds From Operations totaling $419 million represent a decrease of $48 million attributable to
the above variances.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 13
SEGMENTED RESULTS
Segmented information is prepared on the same basis that Brookfield Renewable’s Chief
Executive Officer and Chief Financial Officer (collectively, the CODM) manages the business, evaluates
financial results, and makes key operating decisions. See Note 5 - Segmented information in our audited
annual 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
Generation (GWh) – actual
Revenues
Adjusted EBITDA(1)
Funds From Operations(1)
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA
Generation (GWh) – actual
Revenues
Adjusted EBITDA(1)
Funds From Operations(1)
(1)
2016
North
America Colombia
17,345
15,252
13,221
10,600
Brazil
4,528
3,792
Total
35,094
29,644
$ 1,002 $
819 $
212 $
2,033
677
385
157
1,219
$
370 $
46 $
97 $
513
2015
North
America Colombia
16,540
14,938
N/A
N/A
Brazil
4,024
3,691
Total
20,564
18,629
$ 1,003 $
N/A $
225 $
1,228
708
N/A
188
896
526
Non-IFRS measures. See “PART 5 – Proportionate Information”, “PART 9 - Presentation to Stakeholders and Performance
Measurement” and “PART 10 - Cautionary Statements”.
390 $
136 $
N/A $
$
North America
Generation from the portfolio was 15,252 GWh, below the long-term average of 17,345 GWh and
higher than prior year generation of 14,938 GWh. Generation from our United States portfolio decreased
699 GWh due to dry conditions experienced across the Northeastern United States for most of the year
which was partially offset by stronger generation at our Louisiana facility. Generation from our Canadian
portfolio increased 543 GWh due to above average inflows in our Ontario and Quebec facilities. Our
recently acquired portfolio in Pennsylvania contributed 470 GWh.
Revenues totaling $1,002 million represent a decrease of $1 million. Revenues from stronger
generation in Louisiana, Ontario and Quebec were partially offset by lower generation in the Northeastern
United States for a net contribution of $20 million to revenues. Relatively lower power prices in the United
States were partly offset by an increase in price escalators inherent in power purchase agreements and a
settlement pertaining to the interpretation of the price escalator for power sold under power purchase
agreements for a combined impact on revenues of $28 million. Our recently acquired portfolio in
Pennsylvania contributed $28 million to revenues.
The appreciation of the U.S. dollar impacted revenues denominated in Canadian dollars by $21
million, however, operating and borrowing costs were also affected resulting in a net impact to Funds
From Operations of $17 million.
Cash-earnings from our equity-accounted investments decreased by $12 million from the prior
year primarily due to lower pricing as well as an increase in borrowing cost associated with additional
financing at our pumped storage facility in the Northeastern United States.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 14
Higher operating and borrowing costs primarily associated with the growth in our portfolio were
partially offset by a decrease in current taxes.
Funds From Operations totaling $370 million represent a decrease of $20 million.
Colombia
Generation from the portfolio was 10,600 GWh, below the long-term average of 13,221 GWh.
Despite low hydrology for the first two quarters of this year, the third quarter experienced an improvement
while the fourth quarter’s generation was slightly below long-term average.
Revenues and Funds From Operations totaled $819 million and $46 million, respectively.
Brazil
Generation from the portfolio was 3,792 GWh, below the long-term average of 4,528 GWh and
higher than prior year generation of 3,691 GWh. The recent growth in our portfolio and incremental
generation from a full year’s contribution from assets acquired last year was 476 GWh. An unplanned
outage at one of our facilities resulted in 377 GWh in lost generation.
Revenues totaling $212 million represent a decrease of $13 million. Relatively lower merchant
power prices caused by improved hydrology and an unplanned outage at one of our facilities were
partially offset by improved generation for a net impact of $24 million. The growth in our portfolio
contributed $25 million to revenues. In the prior year we benefited from a $10 million receipt related to the
settlement of matters resulting from the delayed completion of a hydroelectric facility. The appreciation of
the U.S. dollar impacted revenues by $4 million, however, operating costs were also affected resulting in
no impact to Funds From Operations.
Other income, in the prior year, included $17 million relating to the compensation received in
exchange for electing not to renew expired concession agreements for two facilities.
Higher borrowing costs primarily associated with the growth in our portfolio amounted to $9
million.
Funds From Operations totaling $97 million represent a decrease of $39 million.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 15
WIND
The following table reflects the results of our wind operations for the year ended December 31:
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA
Generation (GWh) – actual
Revenues
Adjusted EBITDA(1)
Funds From Operations(1)
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA
Generation (GWh) – actual
Revenues
Adjusted EBITDA(1)
Funds From Operations(1)
(1)
2016
North
America
Europe
Brazil
2,310
1,876
1,531
1,443
588
639
$
202 $
136 $
35 $
151
81
31
$
74 $
18 $
6 $
Total
4,429
3,958
373
263
98
2015
North
America
2,464
1,952
$
$
206
162
Europe
Brazil
1,493
1,551
138
103
$
442
447
22
21
$
Total
4,399
3,950
366
286
113
Non-IFRS measures. See “PART 5 - Proportionate Information”, “PART 9 - Presentation to Stakeholders and Performance
Measurement” and “PART 10 - Cautionary Statements”.
76
32
$
$
$
5
$
North America
Generation from the portfolio was 1,876 GWh, below the long-term average of 2,310 GWh and
lower than prior year generation of 1,952 GWh. Generation from our United States facilities was below
the long-term average but ahead of the prior year by 96 GWh primarily due to stronger wind conditions in
California. The 102 MW wind facility in California, which was sold in the third quarter of 2015, had
contributed 125 GWh in the same period of the prior year. Generation from our Canadian facilities
remained below long-term average and prior year generation due to lower wind conditions across the
portfolio.
Revenues totaling $202 million represent a decrease of $4 million. Revenues from stronger
generation in our United States facilities were partly offset by lower generation in our Canadian facilities
for a net contribution of $6 million. Price escalators inherent in our power purchase agreements combined
with proceeds from a wake impact agreement with neighboring wind facilities contributed $7 million to
revenues.
The appreciation of the U.S. dollar impacted revenues denominated in Canadian dollars by $4
million, however, operating and borrowing costs were also affected resulting in a net decrease in Funds
From Operations of $2 million.
The 102 MW wind facility in California which was sold at the beginning of the third quarter of 2015
had contributed $13 million to revenues during the year. Our share of the gain on the sale contributed $12
million to other income.
Interest savings associated with our amortizing debt and the decrease in operating and borrowing
costs associated with the 102 MW wind facility that was sold in the prior year amounted to $14 million.
Funds From Operations totaling $74 million represent a decrease of $2 million.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 16
Europe
Generation from the portfolio of 1,443 GWh was below the long-term average of 1,531 GWh and
lower than prior year generation of 1,551 GWh. The decrease is primarily attributable to weaker wind
conditions and a planned outage at one of the facilities in Ireland. The contribution from the wind facility
commissioned during the third quarter of the current year was 16 GWh.
Revenues totaling $136 million represent a decrease of $2 million. Revenues from relatively lower
power prices and lower generation in Ireland were largely offset by stronger generation in Portugal. The
wind facility commissioned during the third quarter contributed $1 million to revenues.
In the prior year, we benefited from foreign currency hedging gains of $8 million.
The increase in operating costs primarily associated with revenue growth initiatives amounted to
$12 million.
Funds From Operations totaling $18 million represent a decrease of $14 million.
Brazil
Generation from the portfolio of 639 GWh was above the long-term average of 588 GWh and the
prior year generation of 447 GWh due to improved wind conditions. The incremental generation from a
full year’s contribution attributable to assets acquired last year was 113 GWh.
Revenues totaling $35 million represent an increase of $13 million primarily due to stronger
generation and from a full year’s contribution from the assets acquired in the prior year.
Increased current taxes, and operating and borrowing costs primarily associated with the growth
in our portfolio amounted to $9 million.
Funds From Operations totaling $6 million represent an increase of $1 million.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 17
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, EXCEPT AS NOTED)
Net income
Management service costs
Share of non-cash loss from equity-accounted investments
Unrealized financial instruments loss
Depreciation
Other
Income tax recovery
Current
Deferred
Interest expense - borrowings
Cash portion of non-controlling interests(1)
Adjusted EBITDA(2)
Cash flows from operating activities
Net changes in working capital balances
Changes in due to or from related parties
Other expenses(3)
Gain on disposal(1)
Dividends received from equity-accounted investments
Share of cash-earnings from equity-accounted investments
Distributions to preferred limited partners
Cash portion of non-controlling interests
Funds From Operations(2)
Adjusted sustaining capital expenditures(4)
Adjusted Funds From Operations
Net (loss) income attributable to LP Units, Redeemable/Exchangeable
partnership units, and GP interest
Basic and diluted (loss) earnings per LP Units, Redeemable/
Exchangeable partnership units, and GP interest(5)
$
$
$
$
$
$
2016
40
62
9
4
781
38
44
(97)
606
-
1,487
632
137
(11)
14
-
(6)
9
(15)
(341)
419
(67)
352
$
$
$
$
2015
103
48
10
9
616
63
18
(78)
429
(41)
1,177
588
62
18
1
53
(19)
20
(1)
(255)
467
(60)
407
(65) $
3
(0.23)
$
0.01
Average FX rates to USD
C$
€
R$
GBP
COP
(1)
1.28
0.90
3.33
0.65
-
In 2015, the sale of the 102 MW wind facility in California resulted in a gain of $53 million. 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.
(2) Non-IFRS measures. See “PART 5 – Proportionate Information”, “PART 9 - Presentation to Stakeholders and Performance
1.33
0.90
3.49
0.74
3,045
Measurement” and “PART 10 - Cautionary Statements”.
(3) Primarily acquisition costs related to growth in the portfolio and non-cash interest expense.
(4) Based on long-term sustaining capital expenditure plans.
(5) Weighted average LP Units, Redeemable/Exchangeable partnership units and GP interest outstanding during the year totaled
288.7 million (2015: 275.6 million).
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 18
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
December 31:
Variance of Results
Actual vs.
Actual Generation
LTA Generation
Actual vs. LTA
Prior Year
2015
2014
2015
2014
2015
2014
14,938
15,863
16,540
15,917
(1,602)
3,691
3,371
4,024
3,614
(333)
18,629
19,234
20,564
19,531
(1,935)
(54)
(243)
(297)
(925)
320
(605)
2,591
(512)
(379)
(260)
1,952
1,551
447
2,212
891
-
2,464
1,493
442
826
-
3,950
3,103
4,399
3,417
753
211
580
348
58
5
(449)
173
65
-
(314)
(137)
660
447
847
542
GENERATION (GWh)
Hydroelectric
North America(1)
Brazil
Wind
North America(2)
Europe
Brazil
Other
Total
(1)
22,548
23,332
784
Includes actual generation and long-term average generation for United States of 10,128 GWh and 11,367 GWh, respectively
(2014: 10,293 GWh and 10,785 GWh, respectively) and for Canada of 4,810 GWh and 5,173 GWh, respectively (2014: 5,570
GWh and 5,132 GWh, respectively).
Includes actual generation and long-term average generation for United States 936 GWh and 1,267 GWh, respectively (2014:
1,170 GWh and 1,394 GWh, respectively) and for Canada of 1,016 GWh and 1,197 GWh, respectively (2014: 1,042 GWh and
1,197 GWh, respectively).
25,543
23,296
(2,211)
(748)
(2)
The hydroelectric portfolio in North America and Brazil experienced lower generation during the
year ended December 31, 2015 resulting in a 1,683 GWh decrease compared to the same period of
2014. 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. Hydrology continued to improve in the fourth quarter of 2015 in Brazil. 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.
The Irish wind portfolio generated 32 GWh ahead of 2014 due to improved wind conditions
throughout 2015. 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 2015. Generation from 2014 includes 114 GWh related to the 102 MW wind facility in California sold in
2015.
The 433 MW hydroelectric, wind and biomass portfolio in Brazil and 123 MW wind portfolio in
Portugal acquired in 2015 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 Partners L.P.
Annual Report
December 31, 2016
Page 19
The following table presents selected financial information for the year ended December 31:
$
2015
1,628 $
81
20
(552)
1,177
(48)
-
(429)
(18)
(1)
2014
1,704
10
26
(524)
1,216
(51)
11
(415)
(18)
-
(MILLIONS, EXCEPT AS NOTED)
Revenues
Other income(1)(2)
Share of cash-earnings from equity-accounted investments
Direct operating costs
Adjusted EBITDA(3)
Management service costs
Fixed earnings adjustment (4)
Interest expense – borrowings
Current income tax
Distributions to preferred limited partners
Cash portion of non-controlling interests
Participating non-controlling interests - in operating subsidiaries(1)
Preferred equity
Funds From Operations(3)
(1)
(2)
(145)
(38)
560
In 2015, the sale of the 102 MW wind facility in California resulted in a gain of $53 million. 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 2015, concession agreements relating to two Brazilian hydroelectric facilities expired. Brookfield Renewable elected not to
renew these agreements in exchange for compensation of $17 million.
(184)
(30)
467
(3) Non-IFRS measures. See “PART 9 - Presentation to Stakeholders and Performance Measurement” and “PART 10 - Cautionary
Statements”.
(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.
Revenues for the year ended December 31, 2015 totaling $1,628 million represent a decrease of
$76 million over the same period of 2014.
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
Brazil, strong power prices captured from un-contracted power in our hydroelectric portfolio were partially
offset by lower hydrology resulting 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.
The portfolio acquired during 2015 in Brazil and the 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.
The appreciation of the U.S. dollar compared to the same period of 2014, 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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 20
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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
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
Generation (GWh) – actual
Revenues
Adjusted EBITDA(1)
Funds From Operations(1)
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA
Generation (GWh) – actual
Revenues
Adjusted EBITDA(1)
Funds From Operations(1)
(1)
2015
North
America Colombia
16,540
14,938
N/A
N/A
Brazil
4,024
3,691
Total
20,564
18,629
$ 1,003 $
N/A $
225 $
1,228
708
N/A
188
$
390 $
N/A $
136 $
896
526
2014
North
America Colombia
15,917
15,863
N/A
N/A
Brazil
3,614
3,371
Total
19,531
19,234
$ 1,113 $
N/A $
265 $
1,378
808
N/A
198
1,006
648
Non-IFRS measures. See “PART 9 - Presentation to Stakeholders and Performance Measurement” and “PART 10 -
Cautionary Statements”.
499 $
149 $
N/A $
$
North America
Generation from the portfolio was 14,938 GWh, below the long-term average of 16,540 GWh and
lower than the 2014 generation of 15,863 GWh. While we experienced lower generation in North America
relative to the long-term average and the 2014 generation, inflows in the fourth quarter of 2015 returned
to the long-term average. Our facilities, most notably in New York, Louisiana, New England, Ontario and
Quebec experienced lower generation resulting in a 1,526 GWh decrease compared to 2014. Our
facilities in Canada had benefited from higher than normal inflows in 2014. The incremental generation
from a full year’s contribution from facilities acquired or commissioned in 2014 was 601 GWh.
Revenues totaling $1,003 million represent a decrease of $110 million. Relatively lower
generation compared to 2014 impacted revenues by $101 million. Revenues from lower merchant pricing
were partially offset by the annual escalations in our power purchase agreements for a net impact of $9
million. A full year’s contribution from facilities acquired and commissioned in 2014 resulted in incremental
revenues of $38 million and $7 million, respectively.
The appreciation of the U.S. dollar impacted Canadian dollar revenues by $45 million, but
operating and borrowing costs were also affected and the net impact was largely offset by our foreign
currency hedging program.
Funds From Operations totaling $390 million represent a decrease of $109 million.
Brazil
Generation from the portfolio was 3,691 GWh, below the long-term average of 4,024 GWh and
higher than the 2014 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 facilities
acquired during 2015 contributed 477 GWh which was below the long-term average of 498 GWh.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 22
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 2015 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.
WIND
The following table reflects the results of our wind operations for the year ended December 31:
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA
Generation (GWh) – actual
Revenues
Adjusted EBITDA(1)
Funds From Operations(1)
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA
Generation (GWh) – actual
Revenues
Adjusted EBITDA(1)
Funds From Operations(1)
(1)
North
America
2,464
1,952
$
$
206
162
76
$
$
2015
Europe
Brazil
442
447
22
21
5
1,493
1,551
138
103
$
32
$
2014
North
America
2,591
2,212
$
$
252
191
Europe
Brazil
826
891
45
29
$
N/A
N/A
N/A
N/A
Total
4,399
3,950
366
286
113
Total
3,417
3,103
297
220
$
$
$
98
Non-IFRS measures. See “PART 9 - Presentation to Stakeholders and Performance Measurement” and “PART 10 -
Cautionary Statements”.
N/A
80
18
$
$
$
$
North America
Generation from the portfolio was 1,952 GWh, below the long-term average of 2,464 GWh and
lower than 2014 generation of 2,212 GWh. The decrease is primarily attributable to weak wind conditions
in California during the first half of 2015. 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 $206 million represent a decrease of $46 million. Revenues from lower
generation were partially offset by annual escalations in our power purchase agreements resulting in a
net impact of $18 million. 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 $76 million represent a decrease of $4 million. Our share of the
gain on the 2015 sale of the wind facility was $12 million. Also impacting Funds From Operations were
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 23
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.
Europe
Generation from the portfolio of 1,551 GWh was above the long-term average of 1,493 GWh and
higher than 2014 generation of 891 GWh.
Our portfolio generated 32 GWh ahead of 2014 due to improved wind conditions throughout
2015, and representing a return to normal wind conditions.
Our 123 MW wind portfolio in Portugal acquired in 2015 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.
Brazil
Our 150 MW facilities in Brazil acquired in 2015 contributed 447 GWh which was above the long-
term average 442 GWh.
Revenues and Funds From Operations totaled $22 million and $5 million, respectively.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 24
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, EXCEPT AS NOTED)
Net income
Management service costs
Share of non-cash loss from equity-accounted investments
Unrealized financial instruments loss
Depreciation
Other
Income tax recovery
Current
Deferred
Interest expense - borrowings
Cash portion of non-controlling interests(1)
Adjusted EBITDA(2)
Cash flows from operating activities
Net changes in working capital balances
Changes in due to or from related parties
Other expenses
Gain on disposal(1)
Fixed earnings adjustment(3)
Dividends received from equity-accounted investments
Share of cash-earnings from equity-accounted investments
Distributions to preferred limited partners
Cash portion of non-controlling interests
Funds From Operations(2)
Adjusted sustaining capital expenditures(4)
Adjusted Funds From Operations
Net income attributable to LP Units, Redeemable/Exchangeable
partnership units, and GP interest
Basic and diluted earnings per LP Units, Redeemable/
Exchangeable partnership units, and GP interest(5)
$
$
$
$
$
$
2015
103
48
10
9
616
63
18
(78)
429
(41)
1,177
588
62
18
1
53
-
(19)
20
(1)
(255)
467
(60)
407
3
0.01
$
$
$
$
$
$
2014
203
51
23
(10)
548
(3)
18
(29)
415
-
1,216
700
20
10
6
-
11
(30)
26
-
(183)
560
(58)
502
114
0.42
Average FX rates to USD
C$
€
R$
GBP
(1)
1.10
0.75
2.35
-
In 2015, the sale of the 102 MW wind facility in California resulted in a gain of $53 million. 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.
(2) Non-IFRS measures. See “PART 9 - Presentation to Stakeholders and Performance Measurement” and “PART 10 - Cautionary
1.28
0.90
3.33
0.65
Statements”.
(3) 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.
(4) Based on long-term sustaining capital expenditure plans.
(5) Weighted average LP Units, Redeemable/Exchangeable partnership units and GP interest outstanding during 2015 totaled
275.6 million (2014: 271.1 million).
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 25
CONTRACT PROFILE
We operate the business on a largely contracted basis to ensure a high degree of predictability in
Funds From Operations. We have long-term power purchase agreements with a weighted-average
remaining duration of 16 years (on a proportionate basis). We 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, the legislated requirements in some areas to diversify away from
fossil fuel based generation and because they are becoming increasingly cost competitive.
The following table sets out contracts over the next five years for generation output assuming
long-term average on a proportionate basis:
FOR THE YEAR ENDED DECEMBER 31
Generation (GWh)
Contracted(1)
Hydroelectric
North America(2)
Colombia
Brazil
Wind
North America
Europe
Brazil
Other
Uncontracted
Long-term average on a proportionate basis(3)
Non-controlling interests
Total long-term average
Contracted generation - as at December 31, 2016
% of total generation on a proportionate basis
% of total generation
2017
2018
2019
2020
2021
12,764
2,443
3,403
18,610
1,708
574
233
2,515
283
21,408
2,028
23,436
18,177
41,613
11,979
1,838
3,118
16,935
1,708
612
233
2,553
305
19,793
3,681
23,474
18,236
41,710
11,344
1,187
2,954
15,485
1,708
612
233
2,553
305
18,343
5,131
23,474
18,236
41,710
9,764
546
2,579
12,889
1,708
558
233
2,499
305
15,693
8,016
23,709
18,411
42,120
8,995
248
1,800
11,043
1,708
558
217
2,483
252
13,778
9,931
23,709
18,411
42,120
91%
84%
84%
72%
78%
61%
66%
50%
58%
42%
Price per MWh - total generation on a
proportionate basis
Price per MWh - total generation
(1)
77
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. In the years 2018-2019 and 2020-2021 there is 38 GWh and
273 GWh, respectively, contributed from assets under construction that meet the aforementioned conditions.
Includes generation of 1,410 GWh for 2017 and 624 GWh for 2018 secured under financial contracts.
Long-term average on a proportionate basis includes wholly-owned assets and our share of assets we manage.
68 $
64 $
69 $
66 $
71 $
70 $
74 $
74 $
(2)
(3)
$
$
The contract profile reflects power purchase agreements and financial contracts associated with
the following acquisitions and assets commissioned during the year ended December 31, 2016:
• 3,032 MW hydroelectric and Co-gen portfolio in Colombia
• 296 MW hydroelectric portfolio in Pennsylvania
• 51 MW hydroelectric portfolio in Brazil
• 55 MW biomass facility in Brazil
We remain focused on re-contracting our generation on acceptable terms, once existing contracts
expire, and will do so opportunistically at prices aligned with or above our long-term view.
The majority of Brookfield Renewable’s long-term power purchase agreements are with
investment-grade rated or creditworthy counterparties. The composition of our contracted generation on a
proportionate basis under power purchase agreements is comprised of Brookfield (42%), public power
authorities (17%), industrial users (28%) and distribution companies (13%).
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 26
PART 3 - LIQUIDITY AND CAPITAL RESOURCES
Capitalization, long-term borrowings and available liquidity
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. As at December 31,
2016, long-term indebtedness increased from December 31, 2015 due primarily to portfolio growth.
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(2)
Subsidiary borrowings(3)
Long-term indebtedness
Deferred income tax liabilities, net of deferred income tax assets
Equity
Total capitalization
$
2016
673
$
1,556
7,953
10,182
3,652
12,672
$
26,506
$
38%
2015
368
1,368
5,602
7,338
2,538
8,763
18,639
39%
Debt to total capitalization
(1)
(2)
(3)
Unsecured corporate credit facilities guaranteed by Brookfield Renewable.
Amounts are unsecured and guaranteed by Brookfield Renewable.
Asset-specific, non-recourse borrowings secured against the assets of certain Brookfield Renewable subsidiaries.
During the year ended December 31, 2016 we completed the following financings:
Corporate borrowings and credit facilities
•
•
Issued C$500 million ($383 million) of medium-term corporate notes and repaid our Series 6 notes
(C$300 million) which resulted in a decrease in our weighted-average interest rate on the corporate
borrowings from 5.0% to 4.5% while increasing the weighted-average term from 6.5 years to 7.4
years
Increased the available amount of our corporate credit facilities from $1,560 million to $1,690
million and extended the maturity to June 30, 2021
• Subsequent to the year-end we increased the committed unsecured revolving credit facility
provided by Brookfield to $400 million. See – “PART 4 - Additional Financial Information”
Subsidiary borrowings
In North America, financings executed during the year resulted in a reduction of the average
interest rate by approximately 10 bps while also increasing the average term by approximately half-year.
Overall, the average interest rate increased and the average term of subsidiary borrowings
decreased from December 31, 2015 primarily due to the addition of financing related to our Colombian
portfolio.
During the year we completed financings of over $2.7 billion:
North America
• $500 million related to a 417 MW hydroelectric facility in Pennsylvania
• $315 million associated with recently acquired 296 MW hydroelectric portfolio in Pennsylvania
• $212 million associated with a 150 MW wind portfolio in California
• $190 million associated with a 377 MW hydroelectric portfolio in Tennessee and North Carolina
• C$150 million ($112 million) associated with a 488 MW hydroelectric portfolio in Ontario
• Over $200 million associated with a number of hydroelectric portfolios and one wind facility totaling
559 MW as well as a portfolio of hydroelectric and wind facilities in the United States held through
the Brookfield Americas Infrastructure Fund
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 27
Colombia
• $750 million financing with respect to the acquisition of Isagen
• COP 367 billion ($122 million) amendment to extend its maturity to December 2025
• COP 300 billion ($101 million) bond financing
Europe
• €88 million ($98 million) associated with our 123 MW wind portfolio in Portugal
• £43 million ($55 million) associated with two wind facilities with aggregate capacity of 29 MW in
Ireland
Brazil
• R$137 million ($44 million) financing with respect to a 25 MW hydroelectric facility currently under
construction
The following table summarizes the available liquidity as at December 31:
(MILLIONS)
Consolidated cash and cash equivalents
Less: cash and cash equivalents attributable to
participating non-controlling interests in operating subsidiaries
Brookfield Renewable's share of cash and cash equivalents
Available-for-sale securities
Credit facilities
Authorized credit facilities
Draws on credit facilities
Issued letters of credit
Available portion of credit facilities
Available liquidity
$
$
2016
223 $
(135)
88
136
1,890
(673)
(250)
967
1,191 $
2015
63
(23)
40
14
1,760
(368)
(218)
1,174
1,228
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, our credit facilities and proceeds from the issuance of securities through
public markets.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 28
Long-term debt and credit facilities
The following table summarizes our undiscounted principal repayments and interest payable as at
December 31, 2016:
(MILLIONS)
Principal repayments
Corporate borrowings and
credit facilities
Subsidiary borrowings
Unamortized financing fees, net of
unamortized premiums
2017
2018
2019
2020
2021 Thereafter
Total
-
1,034
1,034
349
300
649
-
556
556
345
1,025
1,370
462
933
1,395
1,079 $ 2,235
4,177
5,256
8,025
10,260
(78)
10,182
Equity-accounted investments
1
6
5
6
6
409
433
$ 10,615
Interest payable(1)
Corporate borrowings and
credit facilities
Subsidiary borrowings
Equity-accounted investments
83
506
20
79
452
25
72
431
20
72
375
20
50
290
20
218 $
574
1,231
3,285
69
174
(1)
1,518 $ 4,033
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.
609
467
556
360
523
Subsidiary borrowings maturing in 2017 are expected to be refinanced or repaid at or in advance
of maturity. This includes our hydroelectric portfolios in New England and New York.
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
2021 on acceptable terms and will do so opportunistically based on the prevailing interest rate
environment.
The overall maturity profile and average interest rates associated with our borrowings and credit
facilities as at December 31 are as follows:
Corporate borrowings
Credit facilities
Subsidiary borrowings
Average term (years) Average interest rate (%)
2016
2015
2016
2015
7.4
4.5
9.0
6.5
4.5
9.3
4.5
1.9
6.4
5.0
1.4
5.5
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 29
CONSOLIDATED STATEMENTS OF CASH FLOWS
The following table summarizes the key items on the audited annual 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 gain (loss) on cash
2016
2015
2014
$
632 $
588 $
2,709
(3,191)
10
(33)
(623)
(19)
700
1,299
(2,037)
(15)
(53)
Increase (decrease) in cash and cash equivalents
$
160 $
(87) $
Cash and cash equivalents as at December 31, 2016 totaled $223 million, representing an
increase of $160 million since December 31, 2015.
Operating Activities
Cash flows provided by operating activities totaling $632 million for the year ended December 31,
2016 represent a year-over-year increase of $44 million.
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.
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)
2016
Trade receivables and other current assets
$
30
$
Accounts payable and accrued liabilities
Other assets and liabilities
(160)
(7)
2015
(72)
2
8
$
(137)
$
(62)
2014
20
(54)
14
(20)
$
$
Financing Activities
Cash flows provided by financing activities totaled $2,709 million for the year ended December
31, 2016. Long-term debt – borrowings totaling $3,477 million were related to the growth in our portfolio,
our subsidiary financing initiatives and the issuance of corporate medium-term notes. Long-term debt –
repayments totaling $1,975 million were related to the repayment of our Series 6, medium-term notes
upon maturity and our subsidiary financing initiatives. The capital provided by participating non-controlling
interests – in operating subsidiaries relates to the growth in our portfolio with our institutional partners and
amounted to $2,621 million. An amount of $1,540 million was paid for the shares owned by public
shareholders of Isagen, in regards to the mandatory tender offers (“MTOs”), which included $6 million in
related acquisition costs. The issuance of LP units and Preferred LP units provided net proceeds of $657
million and $147 million, respectively. See “PART 4 - Additional Financial Information”.
For the year ended December 31, 2016, distributions paid to unitholders of Brookfield Renewable
or BRELP were $522 million (2015: $461 million and 2014: $480 million). We increased our distributions
to $1.78 per LP Unit, an increase of 12 cents per LP Unit which took effect in the first quarter of 2016. The
distributions paid to preferred shareholders, preferred limited partners’ unitholders and participating non-
controlling interests - in operating subsidiaries totaled $156 million (2015: $239 million and 2014: $188
million). See “PART 3 – Liquidity and Capital Resources” for further details.
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
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 30
issuance of medium-term corporate notes during the first quarter of 2015. 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.
Investing Activities
Cash flows used in investing activities for the year ended December 31, 2016 totaled $3,191
million. Our investment in Isagen, a hydroelectric portfolio in Brazil, a hydroelectric portfolio in
Pennsylvania and a wind development project in Ireland totaled $2,769 million, net of cash acquired. Our
investment in the development of power generating assets and sustainable capital expenditures was
$251 million and $118 million, respectively. Our investment in available-for-sale securities amounted to
$60 million.
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, net of cash acquired. 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 $191 million and sustainable capital
expenditures totaled $94 million. Capital distributions received from our equity-accounted investments
were $144 million.
SHARES AND UNITS OUTSTANDING
Shares and units outstanding as at December 31 are as follows:
Class A Preference Shares
Balance, beginning of year
Repurchase of Preference shares for cancellation
Preference Shares exchanged for Preferred LP Units
Balance, end of year
Class A Preferred LP Units
Balance, beginning of year
Issuance of Preferred LP Units
Preference Shares exchanged for Preferred LP Units
Balance, end of year
GP interest
2016
2015
33,921,463
34,000,000
-
(78,537)
(2,885,496)
-
31,035,967
33,921,463
7,000,000
8,000,000
2,885,496
-
7,000,000
-
17,885,496
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
143,188,170
143,356,854
23,352,208
298,946
-
-
171,605
(340,289)
166,839,324
143,188,170
Total LP Units on a fully-exchanged basis(1)
(1)
The fully-exchanged amounts assume the exchange of Redeemable/ Exchangeable partnership units for LP Units.
296,497,947
272,846,793
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 31
DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions declared and paid for the year ended December 31 are as follows:
(MILLIONS)
Class A Preference Shares
Class A Preferred LP Units
Participating non-controlling
Declared
Paid
2016
2015
2014
2016
2015
2014
$
$
25 $
15 $
30 $
1 $
38 $
- $
25 $
12 $
31 $
- $
39
-
interests - in operating subsidiaries
$ 119 $ 208 $ 149 $ 119 $ 208 $ 149
GP interest and Incentive distributions
$
24 $
12 $
6 $
23 $
12 $
6
Redeemable/Exchangeable partnership units
$ 232 $ 217 $ 201 $ 230 $ 216 $ 231
LP Units
$ 281 $ 239 $ 216 $ 269 $ 233 $ 243
LP Unitholder distributions on an annualized, per LP Unit basis, were increased as follows:
Date of
Increase
February 2014
February 2015
February 2016
February 2017
Amount of
Increase
$0.10
$0.11
$0.12
$0.09
Total
Distribution
$1.55
$1.66
$1.78
$1.87
Distribution
Effective Date
March 2014
March 2015
March 2016
March 2017
CONTRACTUAL OBLIGATIONS
Development and construction
The remaining development project costs on two Brazilian hydroelectric projects totaling 47 MW
and two wind projects totaling 43 MW in Europe are expected to be $125 million. One hydroelectric
project with a capacity of 28 MW and the two wind projects are expected to be fully operational in 2017.
The 19 MW hydroelectric project is expected to be fully operational in 2018. The remaining construction
costs associated with the 25 MW hydroelectric facility commissioned in Brazil subsequent to year-end are
expected to be $8 million.
Commitments and contingencies
In December 2016, Brookfield Renewable with institutional partners entered into an agreement to
acquire a hydroelectric portfolio with an aggregate capacity of 210 MW located in Europe for a total
enterprise value of €255 million. The transaction is subject to certain conditions including regulatory
consent and other customary closing conditions and is expected to close in the second quarter of 2017.
Brookfield Renewable will retain an approximate 29% economic interest in the portfolio.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 32
As at December 31, 2016, we had commitments for future minimum lease payments under non-
cancellable leases which fall due as follows:
(MILLIONS)
2017
2018
2019
2020
2021
Thereafter
Total
$
$
29
28
27
26
25
219
354
Brookfield Renewable, on behalf of its 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. See “PART 3 - 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, 2016, the letters of credit issued were $66
million (December 31, 2015: $71 million).
Brookfield Renewable’s subsidiaries and 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, 2016, letters of credit issued by Brookfield
Renewable’s subsidiaries and equity-accounted entities were $483 million and $16 million, respectively
(December 31, 2015: $118 million and $16 million, respectively).
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-STATEMENT OF FINANCIAL POSITION ARRANGEMENTS
Brookfield Renewable has no off-statement of financial position financing arrangements.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 33
PART 4 - ADDITIONAL FINANCIAL INFORMATION
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, at fair value totaled $25.3 billion as at December 31, 2016 as
compared to $18.4 billion as at December 31, 2015. During the year ended December 31, 2016, the
acquisition of our Colombian Portfolio, North American Portfolio, Brazilian Portfolio and European Wind
Development Project totaled $5,741 million. The development and construction of power generating
assets totaled $358 million. The fair value impact of changes in discount rates, short-term electricity
prices and other items was $190 million, $89 million and $48 million respectively. The revaluation of
assets under construction resulted in an increase in fair value of $58 million. The depreciation of the U.S.
dollar increased property, plant and equipment, at fair value by $1,069 million and was largely attributable
to assets in Colombia and Brazil. The Colombian Peso appreciated 12% since the acquisition of the
Colombian Portfolio and the Brazilian Real appreciated 22% over the same period of the previous year.
The increase in value from the appreciation of the Canadian dollar was offset by the depreciation of the
Euro. See Note 11 – Property, plant and equipment, at fair value in the audited consolidated financial
statements for information on the fair value revaluation assumptions used and sensitivity analysis.
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 26 - Related Party Transactions in the 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,
Brookfield Infrastructure Fund II and Brookfield Infrastructure Fund III, 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.
Brookfield Renewable has entered into agreements with Brookfield Infrastructure Fund II and
Brookfield Infrastructure Fund III, in which they provide Brookfield Renewable with access to short-term
financing through the use of the funds credit facilities.
In December 2016, there was a draw for the full amount of the committed unsecured revolving
credit facility provided by Brookfield Asset Management. Subsequent to year-end, the facility increased to
$400 million. The interest expense on this facility, for the year ended December 31, 2016, was less than
$1 million.
Brookfield has placed funds on deposit with Brookfield Renewable, subsequent to year-end and
in the amount of $140 million. Interest earned on the deposits is at market terms.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 34
The following table reflects the related party agreements and transactions on the audited annual
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
EQUITY
Preferred equity
2016
2015
2014
527 $
469 $
8
6
535 $
475 $
(3) $
(5) $
(23)
(40)
(66) $
(62) $
(22)
(30)
(57) $
(48) $
433
6
439
(9)
(21)
(29)
(59)
(51)
$
$
$
$
$
In June 2016, we announced that the Toronto Stock Exchange had accepted a notice of
Brookfield Renewable Power Preferred Equity Inc.’s (“BRP Equity”) intention to renew its 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. The bid will expire on June 26, 2017, or earlier should we complete the
repurchases prior to such date. Shareholders may obtain a copy of the notice, free of charge, by
contacting Brookfield Renewable.
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
“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 Class A, Series 5 Preference Shares were tendered and exchanged for an
equal number of Class A, Series 5 Preferred LP Units.
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 LP Unit distributions exceed $0.4225 per
LP Unit per quarter, the incentive distribution is equal to 25% of distributions above this threshold.
Incentive distributions of $19 million were accrued during the year ended December 31, 2016 (2015: $8
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
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 35
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 May 2016, Brookfield Renewable issued 8,000,000, Series 9 Preferred LP Units at a price of
C$25 per unit for gross proceeds of C$200 million ($152 million). Transaction costs of $5 million were
incurred. The holders of the Series 9 Preferred LP Units will be entitled to receive fixed cumulative
quarterly distributions at an annual rate of C$1.4375 per unit, a yield of 5.75%, for the initial period ending
on July 31, 2021. Thereafter, the distribution rate will be reset every five years at a rate equal to the
greater of (i) the sum of the 5-year Government of Canada bond yield plus 5.01%, and (ii) 5.75%. The
Series 9 Preferred LP Units are redeemable at Brookfield Renewable’s option only on or after July 31,
2021.
The holders of Series 9 Preferred LP Units will have the right, at their option, to convert their
Series 9 Preferred LP Units into Series 10 Preferred LP Units, subject to certain conditions, on July 31,
2021 and every five years thereafter. The holders of Series 10 Preferred LP Units will be entitled to
receive cumulative quarterly floating distributions at an annual rate equal to the 3-month T-Bill yield plus
5.01%.
The Preferred LP Units do not have a fixed maturity date and are not redeemable at the option of
the holders. As at December 31, 2016, none of the Class A Preferred LP Units have been redeemed by
Brookfield Renewable.
Limited partners’ equity
In June 2016, Brookfield Renewable completed a bought deal LP Unit offering (the “Offering”) which
included 12,253,250 LP Units (including 1,598,250 LP Unit issued under the over-allotment option) at a
price of C$37.55 per LP Unit (the “Offering Price”) for gross proceeds of C$460 million ($359 million).
Concurrent with the closing of this Offering, Brookfield Asset Management purchased 11,098,958 LP
Units, at a price representing the Offering Price per LP Unit net of the underwriters’ fee payable by
Brookfield Renewable, for gross proceeds of C$400 million ($313 million). Brookfield Asset Management
owns, directly and indirectly, 180,784,567 LP Units and Redeemable/Exchangeable partnership units,
representing approximately 61% of Brookfield Renewable on a fully-exchanged basis. Brookfield
Renewable incurred $15 million transaction costs associated with the Offering.
In December 2016, we announced that the Toronto Stock Exchange had accepted a notice of
Brookfield Renewable to renew its normal course issuer bid in connection with its LP Units. Under this
normal course issuer bid Brookfield Renewable is permitted to repurchase up to 8.3 million LP Units,
representing approximately 5% of the issued and outstanding LP Units. The bid will expire on December
28, 2017, or earlier should Brookfield Renewable complete the repurchases prior to such date.
Unitholders may receive a copy of the notice, free of charge, by contacting Brookfield Renewable.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 36
PART 5 - PROPORTIONATE INFORMATION
GENERATION AND FINANCIAL REVIEW BY SEGMENTS
The following table reflects the actual and long-term average generation for the year ended
December 31 on a proportionate basis:
Actual Generation
LTA Generation
Actual vs. LTA
Prior Year
2016
2015
2016
2015
2016
2015
Variance of Results
Actual vs.
12,165
11,773
13,250
12,998
(1,085)
(1,225)
392
2,420
3,078
-
3,158
2,994
3,760
-
3,447
(574)
(682)
-
2,420
(289)
(80)
17,663
14,931
20,004
16,445
(2,341)
(1,514)
2,732
1,421
1,437
1,780
1,778
571
266
615
186
605
245
591
184
2,258
2,238
2,630
2,553
301
493
264
319
(359)
(34)
21
(372)
37
(341)
24
2
(315)
174
(16)
(44)
80
20
(192)
GENERATION (GWh)
Hydroelectric
North America(1)
Colombia
Brazil
Wind
North America(2)
Europe
Brazil
Other
Total
(1)
17,662
20,222
2,560
Includes actual generation and long-term average generation for United States of 6,950 GWh and 8,201 GWh, respectively
(2015: 7,080 GWh and 7,949 GWh, respectively) and for Canada of 5,215 GWh and 5,049 GWh, respectively (2015: 4,693
GWh and 5,049 GWh, respectively).
Includes actual generation and long-term average generation for United States of 452 GWh and 583 GWh, respectively (2015:
421 GWh and 581 GWh, respectively) and for Canada of 969 GWh and 1,197 GWh, respectively (2015: 1,016 GWh and 1,197
GWh, respectively).
22,898
19,317
(2,676)
(1,655)
(2)
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 37
The following table reflects Adjusted EBITDA, Funds From Operations, Adjusted Funds From Operations on a proportionate basis, 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)
Management service costs
Interest expense - borrowings
Current income taxes
Distributions to preferred limited partners
Cash portion of non-controlling interests
Participating non-controlling interests -
in operating subsidiaries
Brookfield Renewable's Share
Hydroelectric
Wind
Other Corporate
Total
North
America
814
24
-
6
(294)
550
-
(176)
(4)
-
-
Colombia
Brazil
192 183
3 13
-
(107)
88
-
(36)
(6)
-
3
(69)
130
-
(24)
(9)
-
North
151
-
-
-
(36)
115
-
(41)
-
-
America Europe Brazil
17
-
55
-
31
(1)
-
(13)
17
-
(1)
-
-
1 1,444
47
8
-
9
(570)
930
(62)
(390)
(19)
(15)
-
(24)
(15)
(62)
(91)
-
(15)
-
(23)
32
-
(14)
-
-
-
(4)
13
-
(7)
-
-
-
-
370
-
-
-
-
46 97
-
-
74
-
-
18
-
-
6
-
-
16
-
(25)
(208)
-
(25)
419
Preferred equity
Funds From Operations(1)
Adjusted sustaining capital expenditures(2)
Adjusted Funds From Operations(1)
Adjusted sustaining capital expenditures(2)
Cash portion of non-controlling interests
Distributions to preferred limited partners
Depreciation and amortization
Unrealized financial instrument loss
Share of non-cash earnings 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) Non-IFRS measures. See “PART 9 - Presentation to Stakeholders and Performance Measurement” and “PART 10 - Cautionary Statements”.
(2) Based on long-term sustaining capital expenditure plans.
Non-
controlling
interests
1,008
17
2016
2015
2,452 1,628
81
64
-
(468)
557
-
(216)
(25)
-
(316)
-
-
9
20
(1,038)
(552)
1,487 1,177
(48)
(429)
(18)
(1)
(62)
(606)
(44)
(15)
(316)
(184)
(30)
(25)
419 467
(60)
(67)
352 407
60
341 255
1
(616)
(9)
(781)
(4)
15
67
(10)
(9)
78
97
(38)
(63)
40 103
712 546
6
11
19
(18)
(137)
(62)
632 588
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 38
LONG-TERM DEBT AND CREDIT FACILITIES
The composition of debt obligations, overall maturity profile, and average interest rates
associated with our borrowings and credit facilities on a proportionate basis as at December 31 is
presented in the following table:
2016
2015
Weighted-average
Weighted-average
Interest
rate (%)
4.5
1.9
5.6
9.8
3.7
10.1
6.2
Term
(years)
7.4
4.5
9.6
6.9
11.1
11.7
9.6
(MILLIONS EXCEPT AS NOTED)
Corporate borrowings
Credit facilities
Subsidiary borrowings
North America
Colombia
Europe
Brazil
Total debt
Unamortized financing fees, net of
unamortized premiums(1)
Brookfield Renewable's share
Non-controlling interests
Interest
rate (%)
$
1,562
673
5.0
1.4
Term
(years)
6.5
4.5
$
1,373
368
3,670
5.8
10.2
3,512
468
253
263
4,654
$
6,889
(45)
6,844
3,338
$ 10,182
-
3.9
9.8
5.6
-
11.0
11.3
9.6
-
250
207
3,969
$
5,710
(37)
5,673
1,665
$
7,338
Unamortized premiums and unamortized financing fees are amortized to interest expense over the terms of the borrowing.
The following table summarizes our undiscounted principal repayments on a proportionate basis as at
2017
2018
2019
2020
2021 Thereafter
Total
$
-
750
750
349
160
509
-
221
221
345
513
858
462
302
764
2,708
3,787
1,079 $ 2,235
Unamortized financing fees, net of
unamortized premiums
Equity-accounted investments
1
3
3
3
3
220
4,654
6,889
(45)
6,844
233
$ 7,077
As per IFRS Statements
(1)
December 31, 2016:
(MILLIONS)
Principal repayments
Corporate borrowings and
credit facilities
Subsidiary borrowings
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 39
PART 6 - SELECTED ANNUAL AND QUARTERLY INFORMATION
HISTORICAL OPERATIONAL AND FINANCIAL INFORMATION
YEAR ENDED DECEMBER 31
(MILLIONS, EXCEPT AS NOTED)
Operational information:
Capacity (MW)
Total generation (GWh)
Long-term average generation
Actual generation
Average revenue ($ per MWh)
Proportionate generation (GWh)
Long-term average generation
Actual generation
Average revenue ($ per MWh)
Additional financial information:
Revenues
Adjusted EBITDA(1)
Funds From Operations(1)
Adjusted Funds From Operations(1)
Net income (loss)
Funds From Operations per LP Unit(1)(2)
Distribution per LP Unit
AS AT DECEMBER 31
2016
2015
2014
2013
2012
10,731
7,284
6,707
5,849
5,304
39,948
34,071
72
22,898
20,222
71
25,543
23,332
70
23,296
22,548
77
19,317
17,662
71
18,607
18,173
78
21,836
22,222
77
18,286
18,927
79
$
2,452 $
1,487
419
352
40
1.45
1.78
1,628 $
1,177
467
407
103
1.69
1.66
1,704 $
1,216
560
502
203
2.07
1.55
1,706 $
1,208
594
538
215
2.24
1.45
18,202
15,942
82
16,362
14,376
84
1,309
852
347
295
(95)
1.31
1.38
2013
2016
2014
2015
197
19,507
7,338
2,695
10,744
273
19,849
7,678
2,637
10,968
2012
(MILLIONS, EXCEPT AS NOTED)
Property, plant and equipment, at fair value $ 25,257 $ 18,358 $ 18,566 $ 15,741 $ 15,702
344
206
Equity-accounted investments
16,943
27,737
Total assets
Long-term debt and credit facilities
6,119
10,182
2,349
3,802
Deferred income tax liabilities
9,135
15,065
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/
2,680
Exchangeable units held by Brookfield
576
Preferred equity
324
Preferred limited partners' equity
3,147
3,448
Limited partners' equity
7,808
12,672
Total equity
38%
Debt to capitalization
38%
(1) Non-IFRS measures. See “PART 5 – Proportionate Information”, “PART 9 - Presentation to Stakeholders and Performance
2,865
728
-
3,167
8,881
40%
2,559
610
128
2,827
8,763
39%
290
16,999
6,623
2,265
9,463
2,726
7,536
41%
3,070
500
2,657
796
2,587
2,062
1,028
1,303
5,589
52
59
54
55
63
-
-
Measurement” and “PART 10 - Cautionary Statements”.
(2) For the year ended December 31, 2016, weighted average LP Units, Redeemable/Exchangeable partnership units and GP
interest totaled 288.7 million (2015: 275.6 million, 2014: 271.1 million, 2013: 265.3 million and 2012: 265.2 million).
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 40
SUMMARY OF HISTORICAL QUARTERLY RESULTS
The following is a summary of unaudited quarterly financial information for the last twelve consecutive quarters on a consolidated basis:
(MILLIONS, EXCEPT AS NOTED)
Total Generation (GWh) - LTA
Total Generation (GWh) - actual
Proportionate Generation (GWh) - LTA
Proportionate Generation (GWh) - actual
Revenues
Adjusted EBITDA(1)
Funds From Operations(1)
Net (loss) income
Funds From Operations per LP Unit
Distribution per LP Unit
(1)
2016
Q3
2015
2014
Q4
Q2
Q1
Q4
Q3
Q4
Q1
Q2
Q1
10,608 9,345 10,951 9,044 6,369 5,459 7,199 6,516 5,770 5,065 6,440 6,021
8,728 7,522 8,792 9,029 6,117 4,992 6,400 5,823 5,839 4,383 6,341 5,985
5,887 5,206 6,336 5,469 4,759 4,104 5,479 4,975 4,532 4,023 5,280 4,772
4,734 4,395 5,197 5,896 4,553 3,715 4,834 4,560 4,699 3,418 5,192 4,864
$ 571 $ 580 $ 627 $ 674 $ 392 $ 337 $ 458 $ 441 $ 408 $ 342 $ 474 $ 480
360
223
338
185
61
153
125
(25)
51
0.56
0.70
0.21
0.415 0.3875 0.3875 0.3875 0.3875
455
187
79
0.68
0.445
258
88
(10)
0.32
0.415
242
80
27
0.28
0.415
377
105
(19)
0.37
0.445
323
54
(1)
0.18
0.445
332
73
(19)
0.24
0.445
339
146
35
0.53
0.415
360
198
72
0.74
273
116
31
0.42
Q2
Q3
Non-IFRS measures. See “PART 5 – Proportionate Information”, “PART 9 - Presentation to Stakeholders and Performance Measurement” and “PART 10 - Cautionary Statements”.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 41
FOURTH QUARTER REVIEW
The following table reflects the actual and long-term average generation for the three months
ended December 31:
Actual Generation
LTA Generation
Actual vs. LTA
Prior Year
2016
2015
2016
2015
2016
2015
Variance of Results
Actual vs.
3,258
3,634
624
7,516
495
376
177
3,564
-
1,240
4,804
535
479
125
4,309
3,888
1,073
9,270
562
458
198
1,048
1,139
1,218
1,153
164
174
120
165
4,003
(1,051)
-
1,048
5,051
(254)
(449)
(1,754)
562
443
148
(67)
(82)
(21)
(170)
44
(439)
-
192
(247)
(27)
36
(23)
(14)
9
(306)
3,634
(616)
2,712
(40)
(103)
52
(91)
(10)
GENERATION (GWh)
Hydroelectric
North America(1)
Colombia
Brazil
Wind
North America(2)
Europe
Brazil
Other
Total
(1)
8,728
2,611
Includes actual generation and long-term average generation for United States of 2,054 GWh and 3,092 GWh, respectively
(2015: 2,546 GWh and 2,801 GWh, respectively) and for Canada of 1,204 GWh and 1,217 GWh, respectively (2015: 1,018
GWh and 1,202 GWh, respectively).
Includes actual generation and long-term average generation for United States of 175 GWh and 219 GWh, respectively (2015:
190 GWh and 219 GWh, respectively) and for Canada of 320 GWh and 343 GWh, respectively (2015: 345 GWh and 343 GWh,
respectively).
10,608
(1,880)
6,117
6,369
(252)
(2)
See – “PART 9 - Presentation to Stakeholders and Performance Measurement” for information on
long-term average, our participation in a Brazilian hydroelectric balancing pool and our performance
measurement.
The hydroelectric portfolio generated 7,516 GWh, below the long-term average of 9,270 GWh
and an increase of 2,712 GWh compared to the prior year. In our North American portfolio, generation at
our existing facilities in the United States decreased by 652 GWh due primarily to drier than normal
conditions. The decrease was partially offset by an increase in generation of 186 GWh in Canada
primarily at our facilities in Ontario. In our Brazilian portfolio, generation was 681 GWh lower than the prior
year due to lower inflows across the portfolio and an unplanned outage at one of our facilities. Our
Colombian portfolio generated slightly below long-term average. The growth in our portfolio contributed
3,859 GWh.
The wind portfolio generated 1,048 GWh, below the long-term average of 1,218 GWh and a
decrease of 91 GWh compared to the same period of the prior year. Generation was below the long-term
average due primarily to wind conditions.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 42
The following table presents selected financial information 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)
Management service costs
Interest expense – borrowings
Current income taxes
Distributions to preferred limited partners
Cash portion of non-controlling interests
(48)
Participating non-controlling interests - in operating subsidiaries
(7)
Preferred equity
Funds From Operations(1)
88
(1) Non-IFRS measures. See “PART 9 - Presentation to Stakeholders and Performance Measurement” and “PART 10 - Cautionary
2016
571 $
9
1
(258)
323
(16)
(159)
(24)
(4)
2015
392
6
2
(142)
258
(10)
(103)
(1)
(1)
(60)
(6)
54 $
$
Statements”.
Revenues totaling $571 million represent an increase of $179 million over the prior year.
Relatively lower generation across the portfolio and an unplanned outage at one of our
hydroelectric facilities in Brazil impacted revenues by $35 million and $9 million, respectively.
In the fourth quarter of the prior year, revenues from our Brazil portfolio included a recovery
relating to curtailment of $25 million.
The depreciation of the U.S. dollar contributed $13 million in revenues which also affected
operating and borrowing costs for a net contribution of $8 million to Funds From Operations.
The growth in our portfolio contributed $235 million to revenues with the majority coming from our
business in Colombia.
The average total revenue per MWh was $65, an increase of $1 per MWh. The depreciation of
the U.S. dollar which benefited our revenues denominated in Canadian dollars, Euros and the Brazilian
real and the increase in generation from assets with higher relative pricing was partially offset by the
contributions from our recently acquired assets with relatively lower pricing.
Direct operating costs totaling $258 million, representing an increase of $116 million was primarily
attributable to the growth in our portfolio.
Management service costs totaling $16 million, represent an increase of $6 million primarily
attributable to the growth in our capitalization value.
Interest expense totaling $159 million represents an increase of $56 million which was largely
attributable to the growth in our portfolio and the issuance of corporate medium-term notes in the third
quarter of this year.
Current income tax totaling $24 million represents an increase of $23 million, primarily relating to
the acquisition of the Colombian portfolio during the first quarter of the year.
The cash portion of non-controlling interests totals $66 million an increase of $11 million. The
growth in our portfolio contributed $36 million.
Funds From Operations totaling $54 million represent a decrease of $34 million.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 43
The following table reflects Adjusted EBITDA, Funds From Operations, Adjusted Funds From
Operations, and provides a reconciliation to net loss and cash flows from operating activities for the three
months ended December 31:
(MILLIONS, EXCEPT AS NOTED)
Net loss
Management service costs
Share of non-cash loss from equity-accounted investments
Unrealized financial instruments loss
Depreciation
Other
Income tax recovery
Current
Deferred
Interest expense - borrowings
Adjusted EBITDA(1)
Cash flows from operating activities
Net changes in working capital balances
Changes in due to or from related parties
Other expenses
Share of cash-earnings from equity-accounted investments
Distributions to preferred limited partners
Cash portion of non-controlling interests
Funds From Operations(1)
Adjusted sustaining capital expenditures(2)
Adjusted Funds From Operations
Net loss attributable to LP Units, Redeemable/Exchangeable
partnership units, and GP interest
Basic and diluted loss per LP Units, Redeemable/
Exchangeable partnership units, and GP interest(3)
$
$
$
$
$
$
2016
(1) $
16
2
(2)
188
32
24
(95)
159
323
98
19
17
(11)
1
(4)
(66)
54
(17)
37
$
$
$
2015
(10)
10
2
-
144
48
1
(40)
103
258
39
78
29
(4)
2
(1)
(55)
88
(15)
73
(47) $
(26)
(0.28)
$
(0.09)
Average FX rates to USD
1.34
C$
0.91
€
3.84
R$
0.66
GBP
COP
-
(1) Non-IFRS measures. See “PART 9 - Presentation to Stakeholders and Performance Measurement” and “PART 10 - Cautionary
1.33
0.93
3.29
0.81
3,017
Statements”.
(2) Based on long-term sustaining capital expenditure plans.
(3) Weighted average LP Units, Redeemable/Exchangeable partnership units and GP interest outstanding during the period totaled
299.1 million (2015: 275.5 million).
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 44
PART 7 - BUSINESS RISKS AND RISK MANAGEMENT
RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
Management’s objectives are to protect Brookfield Renewable against material economic
exposures and variability of results from various financial risks that include electricity price risk, foreign
currency risk, interest rate risk, credit risk, and liquidity risk. These risks are further discussed in Note 4 -
Risk Management and Financial Instruments in the audited consolidated financial statements.
The following table outlines Brookfield Renewable’s financial risks and how they are managed:
Financial Risk
Electricity price
Description of Risk
We have exposure to
movements in the market price
of electricity.
Foreign currency
We are exposed to foreign
currency risk – Canadian
dollar, Brazil real, Euro,
Colombian peso, and British
pound sterling – related to
operations, anticipated
transactions, and certain
foreign currency debt.
Management of Risk
• Entering into long-term contracts
that specify the price at which
electricity is sold
• Maintaining a portfolio of short,
medium, and long-term contracts
to mitigate our exposure to short-
term fluctuations in electricity
prices
•
• Ensure limits and controls are in
place for trading activities
In 2016, we had approximately
87% (2015: 85%) of production
under short-term and long-term
power purchase agreements and
financial contracts. See “Part 2 –
Financial Performance Review”
• Enter into foreign currency
contracts designed to minimize the
exposure to foreign currency
fluctuations
• 40% of cash flow is generated in
the United States while Canadian
Dollar and Euro exposure,
representing 25% of our portfolio,
is proactively managed through
foreign currency contracts
• No foreign currency contracts to
hedge our South American
exposures – representing 35% of
our portfolio – due to the high
associated costs. However, these
specific exposures are mitigated
by the annual inflation-linked
escalations in our power purchase
agreements
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 45
Financial Risk
Interest rate
Description of Risk
We are exposed to risk on the
interest rates of our debt, and
on dividend and distribution
rate resets on our Preferred
Shares and Preferred LP
Units, respectively.
Credit
We are exposed to credit risk
from operating activities and
certain financing activities, the
maximum exposure of which is
represented by the carrying
amounts reported in the
statements of financial
position. We are exposed to
credit risk if counterparties to
our energy contracts, interest
rate swaps, forward foreign
exchange contracts and
physical electricity and gas
transactions as well as trade
receivables are unable to meet
their obligations.
Management of Risk
• Assets largely consist of long
duration physical assets, and
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
to minimize the exposure to
interest rate fluctuations
• Enter into interest rate contracts to
lock-in fixed rates on certain
anticipated future debt issuances
• Variable rate debt, which is limited
to certain subsidiary borrowings,
with a total principal value of
$4,194 million (2015: $2,532
million) has $966 million (2015:
$1,040 million) hedged through the
use of interest rate swaps. We
have no interest rate swaps to
hedge our South American
exposures – representing 35% of
our portfolio – due to the high
associated costs
• Diverse counterparty base with
long standing credit histories
• Exposure to counterparties with
investment-grade credit ratings
• Use of standard trading contracts
and other standard credit risk
mitigation techniques
• As at December 31, 2016, 95%
(2015: 99%) of Brookfield
Renewable’s trade receivables
were current
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 46
Financial Risk
Liquidity
Description of Risk
We are exposed to liquidity
risk for financial liabilities.
We are also subject to internal
liquidity risk because we
conduct our business activities
through separate legal entities
(subsidiaries and affiliates) and
are dependent on receipts of
cash from those entities to
defray corporate expenses and
to make dividend and
distribution payments to
shareholders and unitholders,
respectively. Under the credit
agreements for subsidiary
debt, it is conventional for
distributions of cash to
Brookfield Renewable to be
prohibited if the loan is in
default (notably for non-
payment of principal or
interest) or if the entity fails to
achieve a benchmark debt
service coverage ratio. For the
year ended December 31,
2016, Brookfield Renewable
and its subsidiaries were in
compliance with all debt
covenants.
Management of Risk
• As at December 31, 2016, we
were holding cash and cash
equivalents of $223 million ($3
million held corporately) and had
an undrawn corporate line of credit
available of $967 million. Details
of the available portion of credit
facilities and debt maturity ladder
are included in “PART 3 - Liquidity
and Capital Resources”
• Effective and regular monitoring of
debt covenants
• Target investment grade debt or
debt with investment grade
characteristics with the ability to
absorb volatility in cash flows
• Long-term duration of debt
instruments and the diversification
in maturity dates over an extended
period of time
• Sufficient cash from operating
activities, access to undrawn credit
facilities, and possible capital
markets financing to fund our
operations and fulfill our
obligations as they become due
• Ensuring access to public capital
markets and maintaining a strong
investment grade credit rating
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 47
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 2016 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 OUR OPERATIONS AND THE RENEWABLE POWER INDUSTRY
Changes to hydrology at our hydroelectric stations, wind conditions at our wind energy 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 correlated 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 farm
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
energy 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 cogeneration facilities, could limit the volume of electricity these facilities are
able to generate.
Supply and demand in the 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,
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 the cost of emitting CO2; and the structure of the electricity market; and weather conditions
(such as extremely hot or cold weather) that impact electrical load. More generally, there is uncertainty
surrounding the trend in electricity demand growth, which is 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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 48
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 customers to pay for
electricity received.
Seeking to enforce a contract through the courts may take significant amounts of time and
expense with no certainty of success.
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 they 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 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, 2016, approximately 42% of our 2017
contracted generation (on a proportionate basis) was with Brookfield entities, the majority of which are not
publically rated and whose obligations are not guaranteed by Brookfield.
The MRE could be terminated or changed or Brookfield Renewable’s reference amount revised
downward.
In Brazil, hydroelectric power generators have access to a hydrological balancing pool (the
“MRE”), which seeks to stabilize hydrology by assuring that all participant plants in the MRE receive a
reference amount of electricity, approximating long-term average regardless of the actual volume of
energy generated. 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.
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 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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 49
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 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
concessions and licenses will be renewed. However, if we are not granted renewal rights, or if our
concessions or licenses 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 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 or be subject to fines, penalties or additional costs or revocation of regulatory
approvals, permits or licenses. In addition, if we are not able to renew, maintain or obtain all necessary
licenses, permits and governmental approvals required for the continued operation or further
development of our projects, 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 have
shorter lifespans than hydroelectric assets.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 50
The occurrence of dam failures could result in a loss of generating capacity and 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 until the
failure has been repaired. If the failure is at one of our facilities, repairing such failure 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. A dam failure at a generating station or dam operated by a third party could result in new and
potentially onerous regulations that could impact Brookfield Renewable’s facilities. Any such new
regulations could require material capital expenditures to maintain compliance and our financial position
could be adversely affected.
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, measures introduced by foreign governments to control inflation or deflation, currency
exchange or export controls 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 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 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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 51
We may be involved in disputes, governmental and regulatory investigations and possible
litigation.
In the normal course of our operations, Brookfield Renewable is involved in various legal actions
that could expose it to liability for damages. The outcome with respect to outstanding, pending or future
actions cannot be predicted with certainty and may be adverse to us and as a result, could have a
material adverse effect on our assets, liabilities, business, financial condition, results of operations and
cash flow. We and our affiliates are subject to governmental or regulatory investigations from time to time.
Governmental and regulatory investigations, regardless of their outcome, are generally costly, divert
management attention, and have the potential to damage our reputation. The unfavorable resolution of
any governmental or regulatory investigation could result in criminal liability, fines, penalties or other
monetary or non-monetary remedies and could materially affect our business or 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 multiple jurisdictions and it is possible that our operations
will expand into new jurisdictions. Doing business in multiple jurisdictions requires Brookfield Renewable
to comply with the laws and regulations of the United States government as well as those of various non-
U.S. jurisdictions. These laws and regulations may apply to Brookfield Renewable, our service provider
under our Master Services Agreement with Brookfield Asset Management (the “Master Services
Agreement”), our subsidiaries, individual directors, officers, employees and third-party agents. In
particular, our non-United States operations are subject to United States and foreign anti-corruption laws
and regulations, such as the Foreign Corrupt Practices Act of 1977, as amended (“FCPA”). The FCPA,
among other things, prohibits companies and their officers, directors, employees and third-party agents
acting on their behalf from corruptly offering, promising, authorizing or providing anything of value to
foreign officials for the purposes of influencing official decisions or obtaining or retaining business or
otherwise obtaining favorable treatment. Brookfield Renewable and its officers, directors, employees and
third-party agents regularly deal with government bodies and government owned and controlled
businesses, the employees and representatives of which may be considered foreign officials for purposes
of the FCPA. Also, as we make acquisitions, we may expose ourselves to FCPA or other corruption
related risks if our due diligence processes are unable to uncover or detect violations of applicable anti-
corruption laws.
The risk of illegal and corrupt 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. We rely on our employees and certain third parties to comply with our
policies and processes as well as applicable laws. 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, which could expose us to cyber-attacks.
information
technology.
Our business relies on
In addition, our business 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. Any such breach of
our information technology could go undetected for an extended period of time. A breach of our cyber
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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 52
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 like hydro; 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 development 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 or the carbon
emissions of conventional fossil fuel 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.
We expect to finance future acquisitions, the development and construction of new facilities and
other capital expenditures 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 has corporate level debt and many of its operating entities have
limited recourse project level debt. Our ability to obtain debt or equity financing to fund our growth, and
our ability to refinance existing indebtedness, is dependent on, among other factors, the overall state of
the capital markets (as well as local market conditions, particularly in the case of non-recourse
financings), 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
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.
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Risks Related to Our Growth Strategy
We may be unable to identify sufficient investment opportunities and complete transactions as
planned.
Our strategy for building value for our limited partnership units 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 including whether we
expect it will meet our targeted return hurdle and, as such, there is no certainty that we will be able to
continue growing our business by making acquisitions or developing assets at attractive returns.
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. We may also
decline opportunities that we do not believe meet our investment criteria, which our competition may
pursue instead. Further, our growth initiatives are subject to a number of closing conditions, including, as
applicable, third party consents, regulatory approvals (including from 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.
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; the risk of alleged or actual violation of applicable anti-
bribery/anti-corruption laws of 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 limited partnership units may decline.
The development of our greenfield power projects is subject to construction risks and risks
associated with the 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 environmental, engineering and construction risks that could result in
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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 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, Indigenous 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 has recently been supported by state or provincial, national, supranational and international
policies. Some of our projects benefit from such incentives. The attractiveness of renewable energy to
purchasers of renewable assets, as well as the economic return available to project sponsors, is often
enhanced by such incentives. There is a risk that regulations that provide incentives for renewable energy
could change or expire in a manner that adversely impacts the market for renewables generally. Any such
changes may impact the competitiveness of renewable energy generally and the economic value of our
projects in particular.
Other 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 Brookfield
Renewable’s general partner, Brookfield Renewable Partners Limited (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 interest in our business
of approximately 61% as a result of its ownership of our limited partnership 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 a conflicts of interest policy in place, which, among other things, sets out requirements for
the review and approval of transactions between Brookfield Renewable and Brookfield, because
Brookfield will be able to exert substantial influence over us, and, in turn, over our investments, there is a
greater risk that we make investments on terms that disproportionately benefit Brookfield over Brookfield
Renewable and its unitholders. 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 and the price of our limited partnership units.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, 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. Failing to maintain adequate internal controls over financial reporting or
to implement required, new or improved controls, or difficulties encountered in their implementation, could
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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, 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 Relationship with Brookfield
Brookfield exercises substantial influence over Brookfield Renewable and we are highly
dependent on our service provider under our Master Services Agreement.
A subsidiary of Brookfield Asset Management is the sole shareholder of the Managing General
Partner. 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 Brookfield Renewable Energy L.P. (“BRELP”) and will hold any future
acquisitions indirectly through BRELP, the general partner of which is indirectly owned by Brookfield
Asset Management. As Brookfield Renewable’s only substantial asset is the limited partnership interests
that it holds in BRELP, except future voting rights, Brookfield Renewable does not have a right to
participate directly in the management or activities of BRELP or its subsidiaries, including with respect to
the making of decisions (although it has the right to remove and replace the BRELP’s general partner).
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 this 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 to Brookfield Renewable. Failing 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.
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PART 8 - CRITICAL ESTIMATES, ACCOUNTING POLICIES AND INTERNAL CONTROLS
CRITICAL ESTIMATES AND CRITICAL JUDGMENTS
POLICIES
IN APPLYING ACCOUNTING
The audited annual consolidated financial statements are prepared in accordance with IFRS,
which require the use of estimates and judgments in reporting assets, liabilities, revenues, expenses and
contingencies. In the judgment of management, none of the estimates outlined in Note 1 – Basis of
preparation and 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.
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 11 - 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 1(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
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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 4 - 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 statements of financial position 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, Business
Combinations (“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 1(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
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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 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 1(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 1(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.
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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. This standard establishes principles
for the financial reporting of financial assets and financial liabilities that will present relevant and useful
information to users of financial statements for their assessment of the amounts, timing and uncertainty of
an entity’s future cash flows. The new standard makes several improvements to IAS 39; mostly notably
adopting a principle based approach to hedge accounting. While this does not change the type of hedging
relationships or the requirement to measure ineffectiveness, it simplifies the application of hedge
accounting and should allow for better alignment of risk management strategies with accounting
presentation. Other changes include replacing the multiple financial asset impairment models in IAS 39
with a single model based on expected credit losses on all financial assets, and replacing the existing
complex classifications structure with a business model approach based on the intent and nature of the
cash flows.
IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early application
permitted. The adoption of IFRS 9 is a significant initiative for Brookfield Renewable. To date,
Management is in the process of formalizing the transition plan and has begun to catalogue and review
the existing hedging strategies and transactions which do not currently qualify for hedge accounting to
ensure compliance with IFRS 9 and identify new opportunities. Management has also initiated a review of
current risk management policies and internal controls to align with the requirements for hedge
accounting in the new standard. Next steps involve assessing the classification of existing financial
instruments and the suitability of existing IT systems as well as assessing new disclosure requirements.
Management continues to evaluate the overall impact of IFRS 9 on the consolidated financial statements.
(ii) 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 as well as requiring more informative and relevant disclosures. IFRS 15 applies to
nearly all contracts with customers, unless covered by another standard, such as leases, financial
instruments and insurance contracts. In April 2016, the IASB issued amendments to IFRS 15, which
provided additional guidance on the identification of performance obligations, on assessing principal
versus agent considerations and on licensing revenue. The amendments also provide additional transition
relief upon initial adoption of IFRS 15 and have the same effective date as the IFRS 15 standard.
IFRS 15 is effective for annual periods beginning on or after January 1, 2018, with early adoption
permitted. The adoption of IFRS 15 is a significant initiative for Brookfield Renewable. To date,
Management has participated in strategic planning sessions with its parent company and developed a
preliminary adoption plan. Management has also identified major revenue streams to be assessed, and is
currently in the process of accumulating, identifying and inventorying detailed information on major
contracts that may by impacted by the changes at the transition date. Next steps involve completing the
overall analysis, assessing any potential impact to IT systems and internal controls, and reviewing the
additional disclosure required by the standard. Management continues to evaluate the overall impact of
IFRS 15 on the consolidated financial statements.
(iii)
Leases
IFRS 16, Leases (“IFRS 16”) was issued by the IASB on January 13, 2016. IFRS 16 brings most
leases onto the statement of financial position for lessees under a single model, eliminating the distinction
between operating and finance leases. Lessor accounting remains largely unchanged and the distinction
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December 31, 2016
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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. A lessee will apply IFRS 16 to its leases either
retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of
initially applying IFRS 16 being recognized at the date of initial application. IFRS 16 is effective for annual
periods beginning on or after January 1, 2019, with early adoption permitted. Management continues to
evaluate the impact of IFRS 16 on the consolidated financial statements but it is not expected to have a
material effect.
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, 2016, 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, 2016, 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, 2016.
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, 2016 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.
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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, 2016, that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
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PART 9 - PRESENTATION TO STAKEHOLDERS AND PERFORMANCE MEASUREMENT
PRESENTATION TO PUBLIC STAKEHOLDERS
Equity
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
the
partnership
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
As at the date of this report, Brookfield owns an approximate 61% 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 39% is held by the public.
Actual and Long-term Average Generation
For assets acquired or reaching commercial operation during the period, reported generation is
calculated from the acquisition or commercial operation date and is not annualized. As it relates to
Colombia only, generation includes both hydroelectric and Co-gen facilities. See “PART 5 – Proportionate
Information”. “Other” includes generation from North America Co-gen and Brazil biomass. Reported
generation includes 100% of generation for assets we manage.
We compare actual generation levels against the long-term average to highlight the impact of an
important factor that affects 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 Brazil continues to be minimized by participation in a
hydrological balancing pool administered by the government of Brazil. This program mitigates hydrology
risk by assuring that all participants receive, at any particular point in time, an assured energy amount,
irrespective of the actual volume of energy generated. The program reallocates energy, transferring
surplus energy from those who generated an excess to those who generate less than their assured
energy, up to the total generation within the pool. Periodically, low precipitation across the entire country’s
system could result in a temporary reduction of generation available for sale. During these periods, we
expect that a higher proportion of thermal generation would be needed to balance supply and demand in
the country potentially leading to higher overall spot market prices.
Voting Agreements with Affiliates
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. Brookfield Renewable has also entered into a voting agreement with our
consortium partners in respect of our Colombian operations.The voting agreements provide Brookfield
Renewable the authority to direct the election of the Boards of Directors of the relevant entities, among
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 63
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, 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
1(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.
PERFORMANCE MEASUREMENT
Our operations are segmented by the type of power generation (Hydroelectric, Wind, and Other,
which includes Co-gen and Biomass) with Hydroelectric and Wind further segmented by geography
(North America, Colombia, Brazil and Europe), as that is how the CODM review our results, manage
operations and allocate resources. Accordingly, we report our results in accordance with these segments.
See Note 5 – Segmented information in our audited consolidated financial statements.
Our investment in Isagen changed how we present some of our segmented disclosure. Following
the acquisition of Isagen, the CODM consider information on Isagen and Brazil on a standalone basis.
Accordingly, we have added a “Colombia” segment that includes Isagen and a “Brazil” segment that
includes our Brazil operations. The Colombia segment also aggregates the financial results of its
hydroelectric and Co-gen facilities.
We have adjusted the geographies of our Hydroelectric and Wind segments. Given that Canada
and the United States now make up a smaller proportion of our global portfolio, we combined them into a
single North America segment to reflect how the CODM reviews the results of the business, manages
operations, and allocates resources.
One of our primary business objectives is to generate stable and growing cash flows while
minimizing risk for the benefit of all stakeholders. We monitor our performance in this regard through 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 and have limitations as analytical
tools. Specifically, our definition of Funds From Operations may differ from the definition used by other
organizations, as well as the definition of funds from operations used by the Real Property Association of
Canada (“REALPAC”) and the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”), in
part because the NAREIT definition is based on U.S. GAAP, as opposed to IFRS. We provide additional
information below on how we determine Adjusted EBITDA, Funds From Operations and Adjusted Funds
From Operations. We also provide reconciliations to net income (loss) and cash flows from operating
activities. See “PART 2 - Financial Performance Review”, “PART 5 – Proportionate Information” and
“PART 6 - Selected Annual and Quarterly Information”.
Proportionate Information
Information on a proportionate basis reflects our share from facilities in which we own less than
100%. Accordingly, it includes wholly-owned assets, and our share of assets we manage.
Net Income (Loss)
Net income (loss) is calculated in accordance with IFRS.
Net income (loss) is an important measure of profitability, in particular because it has a
standardized meaning under IFRS. The presentation of net income (loss) on an IFRS basis for our
business will often lead to the recognition of a loss or a year-over-year decrease in income even though
the underlying cash flows generated by the assets are supported by strong margins and stable, long-term
power purchase agreements. The primary reason for this is that accounting rules require us to recognize
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 64
a significantly higher level of depreciation for our assets than we are required to reinvest in the business
as sustaining capital expenditures.
Adjusted EBITDA
EBITDA is a non-IFRS measure used by investors to compare companies on the basis of ability
to generate cash from operations.
Brookfield Renewable uses Adjusted EBITDA to assess the performance of its operations before
the effects of interest expense, income taxes, depreciation, management service costs, non-controlling
interests, gain or loss on financial instruments, non-cash gain or loss from equity-accounted investments,
and other typical non-recurring items. Brookfield Renewable adjusts for these factors as they may be non-
cash, unusual in nature and are not factors used by management for evaluating operating performance.
Brookfield Renewable believes that presentation of this measure will enhance an investor’s
understanding of the performance of the business.
Funds From Operations
Funds From Operations is a non-IFRS measure used by investors to compare net earnings from
operations without the effects of certain volatile, primarily non-cash items that generally have no current
financial impact or items not directly related to the liquidity of the business and cash flows retained to fund
distributions and growth initiatives.
Brookfield Renewable uses Funds From Operations to assess the liquidity of the business before
the effects of deferred income taxes, depreciation, non-cash portion of non-controlling interests, gain or
loss on financial instruments, non-cash gain or loss from equity-accounted investments and other typical
non-recurring items as these are not reflective of the liquidity of the underlying business. In our audited
consolidated financial statements we use the revaluation approach in accordance with IAS 16, Property,
Plant and Equipment, whereby depreciation is determined based on a revalued amount, thereby reducing
comparability with our peers who do not report under IFRS as issued by the IASB or who do not employ
the revaluation approach to measuring property, plant and equipment. We add back deferred income
taxes on the basis that we do not believe this item reflects the present value of the actual tax obligations
that we expect to incur over our long-term investment horizon. Brookfield Renewable also uses this metric
to assess the ratio of cash generated by operations as compared to the amount of distributions paid to LP
Unitholders.
Brookfield Renewable believes that analysis and presentation of Funds From Operations on this
basis will enhance an investor’s understanding of the liquidity of the business. Funds From Operations
per unit is not a substitute measure of performance for earnings per share and does not represent
amounts available for distribution to LP Unitholders.
Adjusted Funds From Operations
Adjusted Funds From Operations is a non-IFRS measure used by investors to compare an
entity’s liquidity and the costs to the underlying assets over long holding periods.
Brookfield Renewable defines Adjusted Funds From Operations as Funds From Operations less
Brookfield Renewable’s proportionate share of adjusted sustaining capital expenditures (based on long-
term sustaining capital expenditure plans) which are recurring in nature and used to maintain the
reliability and efficiency of our power generating assets over our long-term investment horizon.
Neither Funds From Operations nor Adjusted Funds From Operations are intended to be
representative of cash provided by operating activities or results of operations determined in accordance
with IFRS.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 65
PART 10 - CAUTIONARY STATEMENTS
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” provisions of the United States Private Securities Litigation Reform Act of 1995 and in any
applicable Canadian securities regulations, concerning the business and operations of 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 nature of our 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, 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.
In some cases, forward-looking statements can be identified by the use of words such as “plans”,
“expects”, “scheduled”, “estimates”, “intends”, “anticipates”, “believes”, “potentially”, “tends”, “continue”,
“attempts”, “likely”, “primarily”, “approximately”, “endeavours”, “pursues”, “strives”, “seeks”, “targets”,
“believes”, or variations of such words and phrases, or statements that certain actions, events or results
“may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be achieved. 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
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 66
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
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; our lack of 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 subsequent date. While we anticipate that subsequent
events and developments may cause our views to change, we disclaim any obligation to update the
forward-looking statements, other than as required by applicable law. For further information on these
known and unknown risks, please see “Risk Factors” included in our Form 20-F.
CAUTIONARY STATEMENT REGARDING USE OF NON-IFRS MEASURES
This Annual Report contains references to Adjusted EBITDA, Funds From Operations, Adjusted Funds
From Operations and Funds From Operations per LP Unit which are not generally accepted accounting
measures under IFRS and therefore may differ from definitions of Adjusted EBITDA, Funds From
Operations, Adjusted Funds From Operations and Funds From Operations per LP Unit used by other
entities. We believe that Adjusted EBITDA, Funds From Operations, Adjusted Funds From Operations
and Funds From Operations per LP Unit 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, Adjusted Funds From Operations nor Funds From
Operations per LP Unit 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 5 - Segmented information in the audited annual consolidated financial statements.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 67
MANAGEMENT’S RESPONSIBILITY
Management’s Responsibility for Financial Statements
The accompanying consolidated financial statements have been prepared by the Brookfield Renewable
Partners L.P. (“Brookfield Renewable”) management which is responsible for their integrity, consistency,
objectivity and reliability. To fulfill this responsibility, Brookfield Renewable maintains policies, procedures
and systems of internal control to ensure that its reporting practices and accounting and administrative
procedures are appropriate to provide a high degree of assurance that relevant and reliable financial
information is produced and assets are safeguarded. These controls include the careful selection and
training of employees, the establishment of well-defined areas of responsibility and accountability for
performance, and the communication of policies and the code of conduct throughout the company.
These consolidated financial statements have been prepared in conformity with International Financial
Reporting Standards as issued by the International Accounting Standards Board and, where appropriate,
reflect estimates based on management’s judgment.
Ernst & Young LLP, the Independent Registered Public 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 28, 2017
Nicholas Goodman
Chief Financial Officer
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 68
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of Brookfield Renewable Partners Limited (General Partner of Brookfield
Renewable Partners L.P.) and Partners of Brookfield Renewable Partners L.P.
We have audited the accompanying consolidated financial statements of Brookfield Renewable Partners
L.P. (“Brookfield Renewable”), which comprise the consolidated statements of financial position as at
December 31, 2016 and 2015, and the related consolidated statements of income, comprehensive
income, changes in equity and cash flows for each of the years in the three-year period ended December
31, 2016, 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 Partners L.P. as at December 31, 2016 and 2015 and its financial
performance and its cash flows for each of the years in the three-year period ended December 31, 2016,
in accordance with International Financial Reporting Standards as issued by the International Accounting
Standards Board.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
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, 2016, 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 28, 2017 expressed an unqualified opinion on Brookfield Renewable’s internal control
over financial reporting.
Toronto, Canada
February 28, 2017
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 70
INTERNAL CONTROL OVER FINANCIAL REPORTING
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of Brookfield Renewable Partners L.P. (“Brookfield Renewable”) is responsible for
establishing and maintaining adequate internal control over financial reporting. Internal control over
financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and
the Chief Financial Officer and effected by the Board of Directors, management and other personnel to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board as defined in Regulation 240.13a–15(f) or
240.15d–15(f).
Management assessed the effectiveness of Brookfield Renewable’s internal control over financial
reporting as of December 31, 2016, 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, 2016,
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 Colombia
Portfolio, North American Portfolio, Brazil Portfolio, and European Wind Development Project acquired in
2016, whose total assets, net assets, total revenues and net income on a combined basis constitute
approximately 27%, 36%, 35% and 345%, respectively, of the consolidated financial statement amounts
as of and for the year ended December 31, 2016.
Brookfield Renewable’s internal control over financial reporting as of December 31, 2016, 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, 2016. 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, 2016.
Sachin Shah
Chief Executive Officer
Nicholas Goodman
Chief Financial Officer
February 28, 2017
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 71
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of Brookfield Renewable Partners Limited (General Partner of Brookfield
Renewable Partners L.P.) and Partners of Brookfield Renewable Partners L.P.
We have audited Brookfield Renewable Partners L.P. (“Brookfield Renewable”)’s internal control over
financial reporting as at December 31, 2016, 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 Colombia Portfolio, North American Portfolio, Brazil
Portfolio, and European Wind Development Project acquired in 2016, which are included in the 2016
consolidated financial statements of Brookfield Renewable and constituted approximately 27% and 36%
of total and net assets, respectively, as of December 31, 2016 and 35% and 345% 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
Colombia Portfolio, North American Portfolio, Brazil Portfolio and European Wind Development Project
acquired in 2016.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 72
In our opinion, Brookfield Renewable maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2016, 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 2016 consolidated
financial statements of Brookfield Renewable and our report dated February 28, 2017 expressed an
unqualified opinion on those financial statements.
Toronto, Canada
February 28, 2017
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 73
BROOKFIELD RENEWABLE 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 tax recovery
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 (loss) earnings per LP Unit
Notes
2016
2015
2014
26
6
7
26
12
18
4
11
8
10
10
13
13
13
13
14
15
$ 2,452
$ 1,628 $ 1,704
64
(1,038)
(62)
(606)
-
(4)
(781)
(38)
(44)
97
53
40
$
122
(552)
(48)
(429)
10
(9)
(616)
(63)
(18)
78
60
10
(524)
(51)
(415)
3
10
(548)
3
(18)
29
11
$
103 $
203
$
65
$
69 $
51
-
-
1
(29)
25
15
(36)
40
(0.23)
$
$
$
$
1
30
1
2
103 $
55
38
-
58
203
0.01 $
0.42
The accompanying notes are an integral part of these consolidated financial statements.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 74
BROOKFIELD RENEWABLE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31
(MILLIONS)
Net income
Other comprehensive income that will not be
reclassified to net income
Revaluations of property, plant and equipment
Actuarial (loss) gain on defined benefit plans
Deferred income taxes on above items
Total items that will not be reclassified to net income
Other comprehensive income (loss) that may be
reclassified to net income
Gain (loss) arising during the year on financial
instruments designated as cash-flow hedges
Unrealized income on available-for-sale securities
Reclassification adjustments for amounts
recognized in net income
Foreign currency translation
Unrealized (loss) gain on foreign currency swaps -
net investment hedge
Deferred income taxes on above items
Total items that may be reclassified subsequently to net income
Other comprehensive income (loss)
Comprehensive income
Comprehensive 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
2016
$
40 $
2015
103 $
2014
203
18, 11
28
10
424
(2)
(34)
388
1,293
1,700
5
(8)
(283)
(369)
1,015
1,323
4
4
4
9
4
10
8
61
10
-
(41)
(32)
(60)
-
-
986
(1,138)
(467)
(66)
(7)
941
55
(8)
(1,113)
1,329
(98)
69
3
(455)
868
$ 1,369 $
5 $ 1,071
13
$
700 $
273 $
310
13
13
13
14
15
6
(2)
8
275
41
15
332
$ 1,369 $
(86)
(87)
1
379
(31)
-
(94)
405
5 $ 1,071
The accompanying notes are an integral part of these consolidated financial statements.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 75
BROOKFIELD RENEWABLE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
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
Goodwill
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
2016
2015
19
20
21
4
26
4
18
11
16
10
22
23
4
26
12
4
12
10
24
13
13
13
13
14
15
$
$
$
$
$
$
$
223
121
454
55
54
907
145
206
25,257
896
150
176
27,737
467
156
76
1,034
1,733
72
9,148
3,802
310
15,065
63
198
256
26
57
600
20
197
18,358
-
157
175
19,507
284
127
64
770
1,245
64
6,568
2,695
172
10,744
5,589
2,587
55
52
2,680
576
324
3,448
12,672
27,737
$
2,559
610
128
2,827
8,763
19,507
The accompanying notes are an integral part of these consolidated financial statements.
Approved on behalf of Brookfield Renewable Partners L.P.:
Patricia Zuccotti
Director
David Mann
Director
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 76
BROOKFIELD RENEWABLE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Accumulated other comprehensive income (loss)
Non-controlling interests
YEAR ENDED DECEMBER 31
(MILLIONS)
Balance, as at December 31, 2015
Net (loss) income
Other comprehensive income (loss)
Preferred LP Units and LP Units issued
- (Note 14, 15)
Net proceeds
Adjustment
Exchange of preferred shares -
(Note 13, 14)
Capital contributions (Note 13)
Acquisitions (Note 13)
Distributions or dividends declared
Distribution reinvestment plan
MTO adjustments (Note 3, 13)
Other
Change in year
Balance, as at December 31, 2016
Balance, as at December 31, 2014
Net income
Other comprehensive (loss) income
Preferred LP Units issued
LP Units and preferred shares
purchased for cancellation
Capital contributions
Distributions or dividends declared
Distribution reinvestment plan
Other
Change in year
Balance, as at December 31, 2015
Limited
partners'
Foreign
currency Revaluation
surplus
equity translation
Actuarial
losses on
defined
benefit Cash flow
hedges
plans
Available-
for-sale
invest-
ments
limited
Total Preferred
limited
partners' partners' Preferred
equity
equity
equity
General
partnership
Participating
non-controlling
interests - in a
interest in holding subsidiary
- Redeemable
a holding
/Exchangeable
subsidiary
units held by
held by
Brookfield
Brookfield
Participating
non-controlling
interests - in
operating
subsidiaries
$ (485) $ (670) $ 4,019 $
-
241
-
105
(36)
-
(7) $
-
(1)
(30) $
-
(1)
- $ 2,827 $ 128 $ 610 $
-
24
(36)
368
25
16
15
-
2,587 $
65
635
52 $
-
6
2,559 $
(29)
304
Total
equity
8,763
40
1,329
657
(85)
-
-
-
-
-
-
-
-
-
-
657
(85)
147
-
-
-
-
-
-
2
-
83
804
-
-
-
-
(281)
9
(24)
(12)
228
-
-
-
-
-
25
-
266
$ (257) $ (404) $ 4,124 $
-
-
-
-
-
-
-
105
$ (241) $ (241) $ 3,685 $
-
(429)
-
-
334
-
2
-
-
(9)
-
(239)
5
(3)
(244)
-
-
-
-
-
(429)
$ (485) $ (670) $ 4,019 $
-
-
-
-
-
334
-
-
-
-
-
-
-
(1)
(8) $
(9) $
-
2
-
-
-
-
-
-
2
(7) $
-
-
-
-
-
-
-
(1)
(31) $
(27) $
-
(3)
-
-
-
-
-
-
(3)
(30) $
-
-
-
(281)
9
1
(12)
621
-
-
-
-
-
-
-
24
24 $ 3,448 $ 324 $ 576 $
49
-
-
(15)
-
-
-
196
(49)
-
-
(25)
-
-
(1)
(34)
- $ 3,167 $
-
-
-
2
(96)
-
- $ 728 $
1
-
128
30
(117)
-
(9)
-
(239)
5
(3)
(340)
-
-
-
-
-
-
- $ 2,827 $ 128 $ 610 $
(1)
-
(30)
-
-
(118)
-
-
(1)
-
-
128
-
2,621
1,417
(119)
-
(1,617)
-
3,002
5,589 $
2,062 $
69
204
-
-
460
(208)
-
-
525
2,587 $
-
-
-
(24)
-
-
19
3
55 $
59 $
-
(2)
-
-
-
(12)
-
7
(7)
52 $
-
-
-
(232)
-
-
(5)
121
-
2,621
1,417
(696)
9
(1,616)
1
3,909
2,680 $ 12,672
2,865 $
1
(87)
-
-
-
(217)
-
(3)
(306)
2,559 $
8,881
103
(98)
128
(10)
460
(707)
5
1
(118)
8,763
December 31, 2016
Page 77
The accompanying notes are an integral part of these consolidated financial statements.
Brookfield Renewable Partners L.P.
Annual Report
BROOKFIELD RENEWABLE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Accumulated other comprehensive income (loss)
Non-controlling interests
FOR THE YEAR ENDED DECEMBER 31
(MILLIONS)
Balance, as at December 31, 2013
Net income
Other comprehensive (loss) income
LP Units issued
Net proceeds
Adjustments
Capital contributions
Distributions or dividends declared
Distribution reinvestment plan
Other
Change in period
Balance, as at December 31, 2014
Actuarial
losses on
defined
benefit Cash flow
hedges
plans
Total
limited
Limited
partners'
Foreign
currency Revaluation
surplus
equity translation
$ (337) $
(83) $ 3,160 $
58
-
-
(158)
-
527
285
(38)
-
(216)
3
4
96
-
-
-
-
-
-
(158)
$ (241) $ (241) $ 3,685 $
-
-
-
-
-
(2)
525
(7) $
-
(2)
-
-
-
-
-
-
(2)
(9) $
equity
partners' Preferred
equity
796 $
38
(69)
(7) $ 2,726 $
-
(20)
58
347
-
-
-
-
-
-
(20)
(27) $ 3,167 $
285
(38)
-
(216)
3
2
441
-
-
-
(38)
-
1
(68)
728 $
General
partnership
Participating
non-controlling
interests - in a
interest in holding subsidiary
- Redeemable
a holding
/Exchangeable
subsidiary
units held by
held by
Brookfield
Brookfield
Participating
non-controlling
interests - in
operating
subsidiaries
1,303 $
51
259
-
-
610
(149)
-
(12)
759
2,062 $
54 $
1
7
-
1
-
(6)
-
2
5
59 $
Total
equity
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 Partners L.P.
Annual Report
December 31, 2016
Page 78
BROOKFIELD RENEWABLE 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
Acquisition of Isagen from non-controlling interests
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 preferred limited partners' unitholders
To unitholders of Brookfield Renewable or BRELP
Investing activities
Acquisitions
Cash and cash equivalents in acquired entity
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 gain (loss) on cash
Cash and cash equivalents
Increase (decrease)
Balance, beginning of year
Balance, end of year
Supplemental cash flow information:
Interest paid
Interest received
Income taxes paid
Notes
2016
2015
2014
$
40 $
103 $
203
11
4
18
10
6
18
26
27
12
12
13
3, 13
14
15
13
14
13, 15
3
3
11
11
6
18
4
781
4
-
(97)
-
24
6
11
(137)
632
3,477
(1,975)
2,621
(1,540)
147
657
-
(119)
(25)
(12)
(522)
2,709
(2,886)
117
616
9
(10)
(78)
(53)
62
19
(18)
(62)
588
548
(10)
(3)
(29)
-
(9)
30
(10)
(20)
700
944
(855)
2,118
(1,046)
460
-
128
-
(10)
(208)
(31)
-
(461)
(33)
(682)
19
610
-
-
285
-
(149)
(39)
-
(480)
1,299
(1,899)
61
(118)
(94)
(108)
(251)
(191)
(78)
-
-
-
(60)
7
(3,191)
10
-
143
144
(18)
56
(623)
(19)
160
63
223 $
588 $
40 $
55 $
(87)
150
63 $
414 $
18 $
32 $
$
$
$
$
23
-
-
(25)
(11)
(2,037)
(15)
(53)
203
150
406
10
33
The accompanying notes are an integral part of these consolidated financial statements.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 79
BROOKFIELD RENEWABLE PARTNERS L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The business activities of Brookfield Renewable
Partners L.P. (“Brookfield Renewable”) consist
of owning a portfolio of renewable power
generating facilities in North America, Colombia,
Brazil and Europe.
Brookfield Renewable changed its name from
Brookfield Renewable Energy Partners L.P. to
Brookfield Renewable Partners L.P. on May 3,
2016.
Brookfield Renewable is a publicly traded limited
partnership established under
laws of
Bermuda pursuant to an amended and restated
limited partnership agreement dated November
20, 2011.
the
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
Asset
Management”). Brookfield Asset Management
than Brookfield
and
Renewable, are also individually and collectively
referred to as “Brookfield” in these financial
statements.
its subsidiaries, other
(“Brookfield
Inc.
limited
Brookfield Renewable’s non-voting
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. Brookfield
Renewable’s Class A, Series 5, Series 7 and
Series 9 preferred limited partners’ equity are
“BEP.PR.E”,
traded
“BEP.PR.G” and “BEP.PR.I” respectively, on the
Toronto Stock Exchange.
symbols
under
the
means Brookfield Renewable Partners L.P. and
its controlled entities.
Notes to consolidated financial statements
GENERAL APPLICATION
1. Basis of preparation and significant accounting
policies
2. Principal subsidiaries
3. Business combinations
4. Risk management and financial instruments
5. Segmented information
Page
81
94
95
101
110
CONOLIDATED RESULTS OF OPERATIONS FOCUSED
6. Other income
7. Direct operating costs
8. Other
9. Foreign currency translation
10. Income taxes
114
114
114
114
115
CONOLIDATED FINANCIAL POSITION FOCUSED
11. Property, plant and equipment, at fair value
12. Long-term debt and credit facilities
13. Non-controlling interests
14. Preferred limited partner’s equity
15. Limited partners’ equity
16. Goodwill
17. Capital management
18. Equity-accounted investments
19. Cash and cash equivalents
20. Restricted cash
21. Trade receivables and other current assets
22. Other long-term assets
23. Accounts payable and accrued liabilities
24. Other long-term liabilities
25. Commitments, contingencies and guarantees
OTHER
26. Related party transactions
27. Supplemental information
28. Pension and employee future benefits
29. Subsidiary public issuers
30. Subsequent events
117
120
125
129
130
131
132
133
134
134
135
135
136
136
137
138
142
143
147
148
Unless
otherwise,
the context
indicates or
requires
term “Brookfield Renewable”
the
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 80
1. 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, 2016, 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 28, 2017.
Certain comparative figures have been reclassified to conform to the current year’s presentation.
References to $, C$, €, R$, £ and COP are to United States (“U.S.”) dollars, Canadian dollars, Euros,
Brazilian reais, British pound sterling and Colombian pesos, respectively.
All figures are presented in millions of U.S. dollars unless otherwise noted.
(b) Basis of preparation
The consolidated financial statements have been prepared on the basis of historical cost, except for the
revaluation of property, plant and equipment and certain assets and liabilities which have been measured
at fair value. Cost is recorded based on the fair value of the consideration given in exchange for assets.
(i) Consolidation
These consolidated financial statements include the accounts of Brookfield Renewable and its
subsidiaries, which are the entities over which Brookfield Renewable has control. An investor controls an
investee when it is exposed, or has rights, to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over the investee. Non-controlling interests in the
equity of Brookfield Renewable’s subsidiaries are shown separately in equity in the consolidated
statements of financial position.
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 United States, Brazil and Europe renewable
power generating operations. Brookfield Renewable has also entered into a voting agreement with our
consortium partners in respect of our Colombian operations. These voting agreements provide Brookfield
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 81
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 26 - 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 1(o)(ii) - Critical judgments in applying accounting policies - Common
control transactions for Brookfield Renewable’s policy on accounting for transactions under common
control.
(ii) Equity-accounted investments and joint ventures
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.
(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 statement of financial position dates. Non-monetary assets and
liabilities, denominated in a foreign currency and measured at fair value, are translated at the rate of
exchange prevailing at the date when the fair value was determined and non-monetary assets measured
at historical cost are translated at the historical rate. Revenues and expenses are measured in the
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 82
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 1(l) – Business combinations.
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.
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December 31, 2016
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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 (“Co-gen”) 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, 2016
is 15 years (2015: 18 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. The revaluation surplus is reclassified within the respective
components of equity and not reclassified to net income when the assets are disposed.
(g) Asset impairment
At each statement of financial position 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, 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.
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December 31, 2016
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(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.
(i) Items qualifying as hedges
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.
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.
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December 31, 2016
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(ii) Items not qualifying as hedges
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. In the case of significant or prolonged
decline in fair value of an investment, an impairment loss is recognized.
(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
statement of financial position dates. Current income tax assets and liabilities are included in trade
receivables and other current assets and accounts payable and accrued liabilities, respectively.
Deferred tax is recognized on taxable temporary differences between the tax 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 statement of financial position date
and reduced to the extent it is no longer probable that the income tax assets will be recovered. Deferred
income tax assets and liabilities are measured at the tax rates that are expected to apply to the year
when the assets are realized or the liabilities settled, using the tax rates and laws enacted or
substantively enacted at the statement of financial position dates.
Current and deferred income taxes relating to items recognized directly in OCI are also recognized
directly in OCI.
(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
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December 31, 2016
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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 (“IAS 12”), 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, Non-current Assets
Held for Sale and Discontinued Operations. The non-controlling interest in the acquiree is initially
measured at the non-controlling interest’s proportion of the net fair value of the identifiable assets,
liabilities and contingent liabilities recognized or when applicable, at the fair value of the shares
outstanding.
To the extent that the aggregate of the fair value of consideration paid, the amount of any non-controlling
interest and the fair value of any previously held interest in the acquiree exceeds the fair value of the net
identifiable tangible and intangible assets acquired, goodwill is recognized. To the extent that this
difference is negative, the amount is recognized as a gain in income. Goodwill is not amortized and is not
deductible for tax purposes. However, after initial recognition, goodwill will be measured at cost less any
accumulated impairment losses. An impairment assessment will be performed at least annually, and
whenever circumstances such as significant declines in expected revenues, earnings or cash flows
indicate that it is more likely than not that goodwill might be impaired. Goodwill impairment charges are
not reversible.
When a business combination is achieved in stages, previously held interests in the acquired entity are
re-measured to fair value at the acquisition date, which is the date control is obtained, and the resulting
gain or loss, if any, is recognized in income. Amounts arising from interests in the acquired business prior
to the acquisition date that have previously been recognized in OCI are reclassified to income. Upon
disposal or loss of control of a subsidiary, the carrying amount of the net assets of the subsidiary
(including any OCI relating to the subsidiary) are derecognized with the difference between any proceeds
received and the carrying amount of the net assets recognized as a gain or loss in income.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a
contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes
in fair values are adjusted against the cost of the acquisition where they qualify as measurement period
adjustments. All other subsequent changes in the fair value of contingent consideration classified as
liabilities will be recognized in the consolidated statements of income, 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 borrowing 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
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December 31, 2016
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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. All actuarial gains and losses are
recognized immediately through OCI in order for the net pension asset or liability recognized in the
consolidated statements of financial position to reflect the full value of the plan deficit or surplus. Net
interest is calculated by applying the discount rate to the net defined benefit asset or liability. Changes in
the net defined benefit obligation related to service costs (comprising of current service costs, past
services costs, gains and losses on curtailments and non-routine settlements), and net interest expense
or income are recognized in the consolidated statements of income.
Re-measurements, comprising of actuarial gains or losses, the effect of the asset ceiling, and the return
on plan assets (excluding net interest), are recognized immediately in the consolidated statements of
financial position with a corresponding debit or credit to 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 statement of financial position date using the current
discount rate. The increase in the provision due to the passage of time is recognized as interest expense.
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
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December 31, 2016
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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.
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 11 - Property, plant and equipment, at fair value. Judgment is involved in determining
the appropriate estimates and assumptions in the valuation of Brookfield Renewable’s property, plant and
equipment. See Note 1(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 4 - Risk management and financial
instruments for more details.
(iii) Deferred income taxes
The consolidated financial statements include estimates and assumptions for determining the future tax
rates applicable to subsidiaries and identifying the temporary differences that relate to each subsidiary.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply during
the year when the assets are realized or the liabilities settled, using the tax rates and laws enacted or
substantively enacted at the consolidated statement of financial position dates. Operating plans and
forecasts are used to estimate when the temporary difference will reverse.
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December 31, 2016
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(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:
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, 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.
Property, plant and equipment
(iii)
The accounting policy relating to Brookfield Renewable’s property, plant and equipment is described in
Note 1(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
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December 31, 2016
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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 development.
Terminal values are included in the valuation of hydroelectric assets in North America. 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 1(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 1(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.
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(p) Future changes in accounting policies
The following table provides a brief description of accounting standards issued but not yet effective, none
of which will be early adopted by Brookfield Renewable:
Standard
Description
Effective
date
Effect on financial
statements
In July 2014,
the IASB issued
the final version
of IFRS 9,
Financial
Instruments
(“IFRS 9”).
The
standard has
a mandatory
effective
date for
annual
periods
beginning on
or after
January 1,
2018, with
early
adoption
permitted.
The standard reflects all phases of the financial
instruments project and replaces IAS 39, Financial
Instruments: Recognition and Measurement and
all previous versions of IFRS 9. This standard
establishes principles for the financial reporting of
financial assets and financial liabilities that will
present relevant and useful information to users of
financial statements for their assessment of the
amounts, timing and uncertainty of an entity’s
future cash flows.
The new standard makes several improvements to
IAS 39; mostly notably adopting a principle based
approach to hedge accounting. While this does
not change the type of hedging relationships or
the requirement to measure ineffectiveness, it
simplifies the application of hedge accounting and
should allow for better alignment of risk
management strategies with accounting
presentation. Other changes include replacing the
multiple financial asset impairment models in IAS
39 with a single model based on expected credit
losses on all financial assets, and replacing the
existing complex classifications structure with a
business model approach based on the intent and
nature of the cash flows.
The adoption of IFRS 9 is a
significant initiative for
Brookfield Renewable.
To date, Management is in the
process of formalizing the
transition plan and has begun
to catalogue and review the
existing hedging strategies
and transactions which do not
currently qualify for hedge
accounting to ensure
compliance with IFRS 9 and
identify new opportunities.
Management has also initiated
a review of current risk
management policies and
internal controls to align with
the requirements for hedge
accounting in the new
standard. Next steps involve
assessing the classification of
existing financial instruments
and the suitability of existing IT
systems as well as assessing
new disclosure requirements.
Management continues to
evaluate the overall impact of
IFRS 9 on the consolidated
financial statements.
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The adoption of IFRS 15 is a
significant initiative for
Brookfield Renewable.
To date, Management has
participated in strategic
planning sessions with its
parent company and
developed a preliminary
adoption plan. Management
has also identified major
revenue streams to be
assessed, and is currently in
the process of accumulating,
identifying and inventorying
detailed information on major
contracts that may be
impacted by the changes at
the transition date. Next steps
involve completing the overall
analysis, assessing any
potential impact to IT systems
and internal controls, and
reviewing the additional
disclosure required by the
standard.
Management continues to
evaluate the overall impact of
IFRS 15 on the consolidated
financial statements.
Management continues to
evaluate the impact of IFRS 16
on the consolidated financial
statements but it is not
expected to have a material
effect.
IFRS 15,
Revenue from
Contracts with
Customers
(“IFRS 15”) was
issued by the
IASB on May
28, 2014.
IFRS 16,
Leases (“IFRS
16”) was issued
by the IASB on
January 13,
2016.
The
standard has
a mandatory
effective
date for
annual
periods
beginning on
or after
January 1,
2018, with
early
adoption
permitted.
The
standard has
a mandatory
effective
date for
annual
periods
beginning on
or after
January 1,
2019, with
early
adoption
permitted.
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 as well as requiring more
informative and relevant disclosures. IFRS 15
applies to nearly all contracts with customers,
unless covered by another standard, such as
leases, financial instruments and insurance
contracts.
In April 2016, the IASB issued amendments to
IFRS 15, which provided additional guidance on
the identification of performance obligations, on
assessing principal versus agent considerations
and on licensing revenue. The amendments also
provide additional transition relief upon initial
adoption of IFRS 15 and have the same effective
date as the IFRS 15 standard.
IFRS 16 brings most leases onto the statement of
financial position 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. A lessee will apply IFRS 16 to its
leases either retrospectively to each prior
reporting period presented or retrospectively with
the cumulative effect of initially applying IFRS 16
being recognized at the date of initial application.
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2. 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, 2016:
Alta Wind VIII LLC(1)
BIF II Safe Harbor Holdings LLC(1)
BIF III Holtwood LLC(1)
Black Bear Hydro Partners, LLC(1)
BRI Green Energy Limited(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)
Erie Boulevard Hydropower, L.P.
Granite Reliable Power, LLC(1)
Great Lakes Hydro America, LLC
Great Lakes Power Limited
Hawks Nest Hydro LLC
Isagen S.A. E.S.P.(1)
Itiquira Energética S.A.
Knockacummer Wind Farm Limited(1)
Kwagis Power Limited Partnership
Lièvre Power L.P.
Mississagi Power Trust
Powell River Energy Inc.
PEA - Parque Eólico da Serra, Unipessola S.A.(1)
Rumford Falls Hydro LLC
Safe Harbor Water Power Corporation(1)
Tangará Energia S.A.(1)
Windstar Energy, LLC
2016 Comber Wind Limited Partnership
(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
Delaware
Delaware
Delaware
Republic of Ireland
Alberta
Ontario
Brazil
Delaware
Ontario
Delaware
Delaware
Louisiana
Delaware
Delaware
Delaware
Ontario
Delaware
Colombia
Brazil
Republic of Ireland
British Columbia
Québec
Québec
Québec
Portugal
Delaware
Pennsylvania
Brazil - São Paulo
California
Ontario
Percentage of
voting securities
owned or controlled
100
100
100
100
100
100
100
100
100
100
100
100
75
100
89.5
100
100
100
99.6
100
100
75
100
100
100
100
100
100
100
100
100
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 94
3. BUSINESS COMBINATIONS
The following investments were accounted for using the acquisition method, and the results of operations
have been included in the audited annual consolidated financial statements since the respective dates of
acquisition.
Colombia Portfolio
Isagen is Colombia’s third-largest power generation company and owns and operates a 3,032 MW
portfolio, consisting predominantly of a portfolio of largely reservoir-based, hydroelectric facilities. Annual
generation is expected to approximate 15,000 GWh.
On January 22, 2016, Brookfield Renewable and its institutional partners (the “consortium”) acquired a
57.6% interest in Isagen from the Colombian government (the “Initial Investment”). Isagen is a listed entity
in Colombia and the remaining 42.4% of shares were owned by public shareholders (the “Isagen Public
NCI”). Following the closing of the Initial Investment, the consortium was required to conduct two
mandatory tender offers (“MTOs”) for the Isagen Public NCI at the same price per share paid for its 57.6%
controlling interest.
On May 13, 2016, the consortium closed the First MTO, pursuant to which a total of 708,817,674
common shares (the “First MTO Shares”) were acquired by the consortium. After giving effect to the First
MTO, the consortium owned approximately 83.6% of Isagen. The First MTO Shares were acquired by the
consortium at a purchase price of COP 4,130 per share for total consideration of COP 2,927 billion
(approximately $929 million).
On September 14, 2016, the consortium closed the Second MTO, pursuant to which a total of
436,998,461 common shares (the “Second MTO Shares”) were acquired by the consortium. After giving
effect to the Second MTO, the consortium owned 99.6% of Isagen. The Second MTO Shares were
acquired by the consortium at a purchase price of COP 4,130 per share for total consideration of COP
1,805 billion (approximately $605 million).
In October 2016, Brookfield Renewable completed the syndication of a portion of its investment in Isagen.
In January 2017, the consortium launched a delisting tender offer that if successful will result in Isagen
being delisted from the Colombia Stock Exchange. The delisting tender offer is expected to close in the
first half of 2017.
Brookfield Renewable is the general partner of and controls the entity that holds the consortium’s 99.6%
interest in Isagen. Brookfield Renewable’s investment is equivalent to an approximate 24% interest.
The financing for the acquisition was as follows:
(MILLIONS)
Non-recourse borrowings
Non-controlling interests
Brookfield Renewable
Initial
Investment(1)
57.6%
$
510 $
1,244
225
MTOs(2)
42.0%
240 $
850
450
1,540 $
Total(3)
99.6%
750
2,094
675
3,519
1,979 $
(1) U.S. dollar amounts in this column are based on an exchange rate of $1 = COP 3,368.
(2)
$
Includes $929 million for the First MTO at an exchange rate of $1 = COP 3,151 and $605 million for the Second MTO at an
exchange rate of $1 = COP 2,986, net of acquisition costs.
Includes $59 million financing and acquisition costs, MTOs related costs, restriction of cash per the terms of a credit
agreement and excess cash.
(3)
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 95
The $750 million of non-recourse borrowings is comprised of both U.S. dollar and COP term loans and
credit facilities. The U.S. dollar loans bear an interest rate of London Interbank Offered Rate (“LIBOR”)
plus a margin of 2.50% and the COP loans bear an interest rate of IBR plus 3.90%. All term loans mature
in January 2021 while the credit facilities expire in July 2019 (with extension rights).
In addition, the consortium assumed loans with principal balances totaling COP 3,718 billion ($1,104
million). The loans bear floating rate interest rates with a weighted-average interest rate of 11.44% and a
weighted-average remaining term of approximately 9 years, as at initial acquisition date.
The total acquisition costs of $13 million were expensed as incurred and have been classified under
Other in the audited annual consolidated statements of income.
Additional information on the Initial Investment in Isagen and the related MTOs, can be found: 1) Note 16
– Goodwill for an explanation of the requirement to recognize goodwill and an estimate of the value; 2)
Note 12 – Long-term debt and credit facilities for financing of the acquisition; and 3) Note 13 – Non-
controlling Interests for our accounting for the Initial Investment in Isagen and the MTOs as separate
transactions.
If the acquisition had taken place at the beginning of the year, the revenue from Isagen for the year ended
December 31, 2016 would have been $900 million.
Brazil Portfolio
In January 2016, Brookfield Renewable acquired a 51 MW hydroelectric portfolio in Brazil (“Brazil
Portfolio”). Total consideration of R$417 million ($103 million) included cash paid of R$355 million ($88
million), deferred consideration of R$35 million ($9 million) and the impact of the foreign currency
contracts of R$24 million ($6 million). Brookfield Renewable retains a 100% interest in the portfolio.
The total acquisition costs of less than $1 million were expensed as incurred and have been classified
under Other in the audited annual consolidated statements of income.
North American Portfolio
In April 2016, Brookfield Renewable acquired a 296 MW portfolio of hydroelectric facilities in
Pennsylvania that are expected to generate 1,109 GWh annually (“Pennsylvania Hydro”). The acquisition
was completed with institutional partners, and Brookfield Renewable initially retained an approximately
33% controlling interest in the portfolio. In September 2016, institutional investors increased their
investments in the portfolio, thus reducing Brookfield Renewable’s ownership to approximately 28.6%.
Total cash consideration was $859 million. The acquisition costs of $6 million were expensed as incurred
and have been classified under Other in the audited annual consolidated statements of income.
If the acquisition had taken place at the beginning of the year, the revenue from Pennsylvania Hydro for
the year ended December 31, 2016 would have been $46 million.
In April 2016, Brookfield Renewable entered into a voting agreement with a Brookfield subsidiary that
forms part of Brookfield Infrastructure Fund III. Pursuant to this voting agreement, Brookfield Renewable
is entitled to direct the election of the directors of the entity that ultimately controls and operates the
Pennsylvania Hydro assets.
European Wind Development Project
In September 2016, Brookfield Renewable acquired a 19 MW wind development project in Ireland. The
total consideration of €8 million ($9 million) included cash consideration of €7 million ($8 million) and
deferred consideration and working capital adjustments of €1 million ($1 million). The acquisition was
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 96
completed with institutional partners, and Brookfield Renewable retained an approximately 40%
controlling interest in the asset. The total acquisition costs of less than $1 million were expensed as
incurred and have been classified under Other in the audited annual consolidated statements of income.
Purchase price allocations
Purchase price allocations, at fair values, with respect to the acquisitions are as follows:
(MILLIONS)
Cash and cash equivalents
Trade receivables and other current assets
Property, plant and equipment, at fair value
Other long-term assets
Current liabilities
Long-term debt
Deferred income tax liabilities
Other long-term liabilities
Non-controlling interests
Fair value of net assets acquired
Goodwill (Note 16)
Purchase price
Colombia
$
113 $
Brazil Pennsylvania
Ireland
4 $
- $
- $
174
4,772
15
(463)
(899)
(1,019)
(149)
(1,417)
1,127
799
2
100
-
(3)
-
-
-
-
103
-
1
859
-
(1)
-
-
-
-
859
-
Total
117
177
5,741
15
(467)
(899)
-
10
-
-
-
(1)
(1,020)
-
-
9
-
(149)
(1,417)
2,098
799
$ 1,926 $
103 $
859 $
9 $ 2,897
The estimated fair values of the assets acquired and liabilities assumed for the Pennsylvania and Ireland
acquisitions are expected to be finalized within 12 months of the acquisition date. The purchase price
allocations for the Colombia and Brazil acquisitions have been finalized.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 97
Completed in 2015
European 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.
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 £47 million ($72 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 £6 million ($9 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
Statements of Financial Position within the Other long-term liabilities line item.
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 2015 the revenue from the acquisition would have
been $93 million (unaudited) for the year ended December 31, 2015.
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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 98
Purchase price allocations
Final 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
Completed During 2014
Brazil Portugal Scotland
Total
$
19 $
- $
- $
16
16
854
(21)
(280)
-
(16)
5
3
209
(19)
(111)
(16)
-
19
21
20
-
1
84
1,147
(1)
-
(12)
-
(41)
(391)
(28)
(16)
$
588 $
71 $
72 $
731
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 2014, 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 2014, 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.
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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 99
If the acquisition had taken place at the beginning of 2014, 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 2014, the revenue from the acquisition would have
been $92 million (unaudited) for the year ended December 31, 2014.
Final purchase price allocations, at fair values, with respect to the acquisitions were as follows:
(MILLIONS)
Maine California Pennsylvania
Ireland
Total
Cash and cash equivalents
$
7 $
4 $
15 $
35 $
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
-
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
During the years ended December 31, 2016 and 2015, the purchase price allocations for the acquisitions
in 2015 and 2014, respectively, were finalized. No material changes to the provisional purchase price
allocations disclosed in the audited consolidated financial statements for 2015 and 2014 had to be
considered for acquisitions made in the respective years.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 100
4. 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.
The sensitivity analysis discussed below reflect the risks associated with instruments that Brookfield
Renewable considers are market sensitive and the potential loss resulting from one or more selected
hypothetical changes. Therefore, the discussion below is not intended to reflect fully Brookfield
Renewable’s risk exposure.
(a) Market risk
Market risk is defined for these purposes as the risk that the fair value or future cash flows of a financial
instrument held by Brookfield Renewable will fluctuate because of changes in market prices.
Brookfield Renewable faces market risk from foreign currency assets and liabilities, the impact of changes
in interest rates, and floating rate liabilities. Market risk is managed by funding assets with financial
liabilities in the same currency and with similar interest rate characteristics and holding financial contracts,
such as interest rate swaps and foreign exchange contracts, to minimize residual exposures. Financial
instruments held by Brookfield Renewable that are subject to market risk include borrowings and financial
instruments, such as interest rate, currency and commodity contracts. The categories of financial
instruments that can give rise to significant variability are described below:
(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
Effect on net income(1)
2016
2015
Effect on OCI(1)
2014
2016
2015
2014
$
(1) $
(2) $
(1) $
(7) $
(7) $
(9)
9
5% decrease
(1) Amounts represent the potential annual net pretax impact.
1
2
1
7
7
(ii) Foreign currency risk
Foreign currency risk is defined for these purposes as the risk that the fair value of a financial instrument
held by Brookfield Renewable will fluctuate because of changes in foreign currency rates.
Brookfield Renewable has exposure to the Canadian dollar, Brazilian real, Euro, British pound sterling
and Colombian pesos 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
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 101
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
Effect on net income(1)
2016
2015
Effect on OCI(1)
2014
2016
2015
$
1 $
2 $
12 $
51 $
10 $
5% decrease
(1) Amounts represent the potential annual net pretax impact.
(1)
(2)
(12)
(51)
(10)
2014
19
(19)
(iii) Interest rate risk
Interest rate risk is defined for these purposes as the risk that the fair value or future cash flows of a
financial instrument held by Brookfield Renewable will fluctuate, because of changes in interest rates.
Brookfield Renewable’s assets largely consist of long duration physical assets. Brookfield Renewable’s
financial liabilities consist primarily of long-term fixed rate debt or 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 $4,194
million (2015: $2,532 million). Of this principal value, $966 million (2015: $1,040 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
Effect on net income(1)
2016
2015
Effect on OCI(1)
2014
2016
2015
$
(17) $
(15) $
(13) $
115 $
125 $
1% decrease
(1) Amounts represent the potential annual net pretax impact.
17
15
13
(115)
(125)
2014
138
(138)
(b) Credit risk
Credit risk is the risk of loss due to the failure of a borrower or counterparty to fulfill its contractual
obligations. Brookfield Renewable’s exposure to credit risk in respect of financial instruments relates
primarily to counterparty obligations regarding energy contracts, interest rate swaps, forward foreign
exchange contracts and physical electricity and gas transactions.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 102
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 21 - 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
$
2016
223
250
365
200
54
$
2015
63
336
185
32
57
$
1,092
$
673
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 12 – 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.
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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 103
CASH OBLIGATIONS
The table below classifies the cash obligations related to Brookfield Renewable’s liabilities into relevant
maturity groupings based on the remaining period from the statement of financial position dates to the
contractual maturity date. As 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 statements of financial position.
AS AT DECEMBER 31, 2016
(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, 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
(1)
(2)
< 1 year 2-5 years
> 5 years
$
467 $
- $
- $
66
-
4
6
-
11
3,970
1,821
5,256
10,260
1,449
3,859
$
2,323 $
5,861 $
6,722 $ 14,906
< 1 year 2-5 years
> 5 years
$
284 $
- $
- $
Total
467
228
76
16
Total
284
191
64
12
60
-
2
4
-
9
3,136
1,121
3,488
1,170
7,393
2,666
156
76
1
1,034
589
127
64
1
769
375
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.
$
1,620 $
4,319 $
4,671 $ 10,610
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 104
Brookfield Renewable classifies its assets and liabilities as outlined below:
AS AT DECEMBER 31, 2016
(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
Goodwill
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
receivables
$
223 $
121
-
365
-
54
-
-
-
-
-
129
Assets/
liabilities(1)
Derivatives
used for
hedging
Other Non-financial
assets and
non-financial
liabilities
financial
assets and
liabilities
- $
-
-
-
-
-
- $
-
-
-
-
-
- $
-
-
-
-
-
14
50
136
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- $
-
-
-
89
-
-
206
Total
223
121
365
89
54
200
206
25,257
25,257
896
150
47
896
150
176
892 $
14 $
50 $
136 $ 26,645 $ 27,737
- $
- $
- $
467 $
-
-
-
-
-
11
217
-
-
-
-
-
-
-
-
-
76
10,182
- $
-
-
-
467
228
76
10,182
-
3,802
3,802
310
-
310
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.
217 $ 11,035 $ 3,802 $ 15,065
11 $
- $
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 105
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
receivables
$
63 $
Derivatives
financial
used for assets and
liabilities
hedging
Other Non-financial
assets and
non-financial
liabilities
Assets/
liabilities(1)
- $
- $
- $
198
185
-
57
-
-
-
-
138
-
-
-
-
-
-
-
-
15
31
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- $
-
-
71
-
-
Total
63
198
185
71
57
46
197
197
18,358
18,358
157
37
157
175
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.
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 Partners L.P.
Annual Report
December 31, 2016
Page 106
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(2)
Energy derivative contracts
Interest rate swaps
Foreign exchange swaps
Available-for-sale investments
Property, plant and equipment
Liabilities measured at fair value:
Financial instrument liabilities(2)
Energy derivative contracts
Interest rate swaps
Level 1
Level 2
Level 3
2016
2015
$ 223 $
250
- $
-
- $
223 $
-
-
-
-
-
250
8
7
49
136
63
336
31
-
1
14
25,257
25,257
18,358
-
-
-
(16)
(5)
(178)
(45)
(16)
(1)
(178)
(12)
(32)
8
7
49
-
-
(5)
(178)
(45)
-
-
-
-
136
-
-
-
-
-
-
Foreign exchange swaps
Contingent consideration(3)
Liabilities for which fair value is disclosed:
Long-term debt and credit facilities(2)
Total
(1)
(2)
(3) Amount relates to 2015 and 2014 business combinations.
Includes both the current amount and long-term amount included in Other long-term assets.
Includes both the current and long-term amounts.
(10,870)
-
(10,870)
(7,892)
$ 609 $ (11,034) $ 25,241 $ 14,816 $ 10,688
There were no transfers between levels during the year ended December 31, 2016.
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
Available-for-sale securities
Total
Less: current portion
Long-term portion
2016
2015
Net (Assets) Net (Assets)
Assets
Liabilities
Liabilities
Liabilities
$
8 $
5 $
(3)
$
7
49
136
200
55
178
45
-
228
156
$
145 $
72 $
171
(4)
(136)
28
101
(73)
$
(30)
178
11
(14)
145
101
44
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 107
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
2016
2015
2014
$ 145 $
77 $
56
(Decreases) increases in the net financial instrument liability position:
Unrealized (gain) loss through income on energy derivative contracts
Unrealized loss (gain) through OCI on energy derivative contracts
Unrealized loss (gain) through income on interest rate swaps
Unrealized loss through OCI on interest rate swaps
Unrealized (gain) loss through income on foreign exchange swaps
Unrealized loss (gain) through OCI on foreign exchange swaps
Unrealized loss through income on available-for-sale investments
Unrealized (gain) through OCI on available-for-sale investments
Acquisitions, settlements and other
(a)
(a)
(b)
(b)
(c)
(c)
(d)
(d)
-
28
7
1
(3)
61
-
(52)
(159)
(2)
3
(2)
20
13
(57)
25
-
68
Balance, end of year
$
28 $ 145 $
3
(37)
-
93
(13)
(65)
-
-
40
77
Financial instrument liabilities not designated as hedging instruments:
Energy derivative contracts
Interest rate swaps
Foreign exchange swaps
Net positions
Financial instrument liabilities designated as hedging instruments:
Energy derivative contracts
Interest rate swaps
Foreign exchange swaps
Net positions
Financial instrument assets not designated as hedging instruments:
Energy derivative contracts
Interest rate swaps
Foreign exchange swaps
Available-for-sale investments
Net positions
Financial instrument assets designated as hedging instruments:
Energy derivative contracts
Interest rate swaps
Foreign exchange swaps
Net positions
Total net positions
(a) Energy derivative contracts
(a) $
3 $
- $
(b)
(c)
2
6
-
-
$
11 $
- $
-
-
-
-
(a) $
2 $
1 $
-
(b)
(c)
176
39
178
12
170
4
$ 217 $ 191 $ 174
(a) $
(3) $
(b)
(c)
(d)
(1)
(10)
(136)
- $
-
-
-
(1)
(14)
(14)
(31)
(45)
$ (150) $
(15) $
(a) $
(5) $
(31) $
(31)
(b)
(c)
(6)
(39)
-
-
(50) $
(31) $
-
(21)
(52)
28 $ 145 $
77
$
$
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
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 108
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, 2016, gains of $48 million relating to energy derivative contracts were
realized and reclassified from OCI to revenues in the consolidated statements of income (loss) (2015: $32
million and 2014: $4 million).
Based on market prices as of December 31, 2016, unrealized gains of $6 million (2015: $25 million and
2014: $18 million) 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.
(b)
Interest rate hedges
Brookfield Renewable has entered into interest rate hedge contracts primarily to minimize exposure to
interest rate fluctuations on its variable rate debt or to lock in interest rates on future debt refinancing. All
interest rate hedge contracts are recorded in the consolidated financial statements at fair value.
At December 31, 2016, agreements with a total notional exposure of $2,397 million were outstanding
(2015: $2,002 million) including $871 million (2015: $nil) associated with agreements that are not formally
designated as hedging instruments. The fixed interest rates resulting from these agreements range from
0.82% to 6.24% (2015: 0.51% to 5.88%).
For the year ended December 31, 2016, net movements relating to cash flow hedges realized and
reclassified from OCI to interest expense – borrowings in the consolidated statements of income (loss)
were $16 million losses (2015: $nil and 2014: $4 million losses).
Based on market prices as of December 31, 2016, unrealized losses of $110 million (2015: $114 million
and 2014: $95 million) recorded in AOCI on interest rate swaps are expected to be settled or reclassified
into income in the next twelve months. The actual amount reclassified from AOCI, however, could vary
due to future changes in market rates.
(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, 2016, agreements with a total notional exposure of $1,325 million were outstanding
(2015: $442 million) including $283 million (2015: $36 million) associated with agreements that are not
formally designated as hedging instruments.
Based on market prices as of December 31, 2016, unrealized losses of $1 million (2015: $12 million
losses and 2014: $26 million gains) 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.
(d) Available-for-sale
Brookfield Renewable’s available for sale assets consist of investments in publicly-quoted securities.
Available-for-sale securities are recorded on the statement of financial position at fair value, and are
assessed for impairment at each reporting date. For the year ended December 31, 2016, net movements
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 109
relating to available-for-sale securities realized and reclassified from OCI to net income were $9 million
gains (2015 and 2014: $nil).
5. SEGMENTED INFORMATION
Brookfield Renewable operates renewable power generating assets, which include hydroelectric facilities
and wind facilities located in North America, Colombia, Brazil and Europe. Brookfield Renewable also
operates four biomass facilities and three 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 Co-gen and biomass).
The investment in Isagen (Note 3 – Business combinations) changed how Brookfield Renewable presents
some of the segmented disclosure. Following the acquisition of Isagen, the CODM consider information
on Isagen and Brazil on a standalone basis. Accordingly, a “Colombia” segment that includes Isagen and
a “Brazil” segment that includes our Brazil operations has been added. The Colombia segment
aggregates the financial results of its hydroelectric and Co-gen facilities.
Brookfield Renewable adjusted the geographies of the Hydroelectric and Wind segments. Given that
Canada and the United States now make up a smaller proportion of the global portfolio, they were
combined into a single North America segment to reflect how the CODM reviews the results of the
business, manages operations, and allocates resources.
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 1 – 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 and current income taxes, which is
then adjusted for the cash portion of non-controlling interests and distributions to preferred limited
partners.
Transactions between the reportable segments occur at fair value.
The following segmented information is regularly reported to our CODM.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 110
(MILLIONS)
For the year ended December 31, 2016:
Revenues(2)
Adjusted EBITDA
Interest expense - borrowings
Cash portion of non-controlling interests
Funds From Operations
Depreciation
For the year ended December 31, 2015:
Revenues(2)
Adjusted EBITDA
Interest expense - borrowings
Cash portion of non-controlling interests
Funds From Operations
Depreciation
Hydroelectric
North
North
Wind
Other(1) Corporate
Total
America Colombia
Brazil
America
Europe
Brazil
$ 1,002 $
677
(229)
(73)
370
(306)
819 $
385
(153)
(162)
46
(118)
$ 1,003 $
708
(222)
(90)
390
(282)
- $
-
-
-
-
-
212
157
(34)
(16)
97
(141)
225
188
(24)
(17)
136
(125)
$
$
202 $
151
(53)
(24)
74
(103)
206 $
162
(63)
(23)
76
(111)
136 $
81
(29)
(34)
18
(84)
138 $
103
(29)
(43)
32
(80)
35 $ 45 $
31
(14)
(9)
6
(12)
20
(3)
2
16
(17)
22 $ 34 $
21
(9)
(6)
5
(9)
14
(2)
(5)
6
(9)
1 $
(15)
(91)
(25)
(208)
-
- $
(19)
(80)
(30)
(178)
-
2,452
1,487
(606)
(341)
419
(781)
1,628
1,177
(429)
(214)
467
(616)
For the year ended December 31, 2014:
Revenues(2)
Adjusted EBITDA
Interest expense - borrowings
Cash portion of non-controlling interests
Funds From Operations
Depreciation
(1)
(2) North America revenues totaled $786 million and $418 million in the United States and Canada, respectively (2015: $799 million and $410 million and 2014: $848 million and $517
- $ 29 $
-
-
-
-
-
$ 1,113 $
808
(223)
(85)
499
(241)
252 $
191
(77)
(34)
80
(135)
45 $
29
(9)
(13)
18
(25)
1,704
1,216
(415)
(183)
560
(548)
- $
-
-
-
-
-
265
198
(19)
(13)
149
(143)
(21)
(87)
(38)
(197)
-
11
-
-
11
(4)
- $
$
Includes Co-gen and biomass.
million).
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 111
The following table reconciles Adjusted EBITDA and Funds From Operations, presented in the above
tables, to net income and cash flows from operating activities as presented in the consolidated
statements of cash flows, for the year ended December 31:
(MILLIONS, EXCEPT AS NOTED)
Net Income
Management service costs
Share of non-cash loss from equity-accounted investments
Unrealized financial instruments loss
Depreciation
Other
Income tax recovery
Current
Deferred
Interest expense - borrowings
Cash portion of non-controlling interests(1)
Adjusted EBITDA
Notes
$
18
4
8
10
10
12
2016
40 $
62
9
4
781
38
44
(97)
606
-
2015
103 $
48
10
9
616
63
18
(78)
429
(41)
$ 1,487 $ 1,177 $
2014
203
51
23
(10)
548
(3)
18
(29)
415
-
1,216
$
Cash flows from operating activities
Net changes in working capital balances
Changes in due to or from related parties
Other expenses
Gain on disposal(1)
Fixed earnings adjustment
Dividends received from equity-accounted investments
Share of cash-earnings from equity-accounted investments
Distributions to preferred limited partners
Cash portion of non-controlling interests
Funds From Operations
(1)
700
20
10
6
-
11
(30)
26
-
(183)
560
In 2015, the sale of the 102 MW wind facility in California resulted in a gain of $53 million. 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.
588 $
62
18
1
53
-
(19)
20
(1)
(255)
467 $
632 $
137
(11)
14
-
-
(6)
9
(15)
(341)
419 $
18
18
14
$
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 112
The following table presents information about Brookfield Renewable’s certain statement of financial position items on a segmented basis:
(MILLIONS)
As at December 31, 2016:
Property, plant and equipment, at fair value(2)
Total assets
Total borrowings
Total liabilities
For the year ended December 31, 2016:
Additions to property, plant and equipment
As at December 31, 2015:
Property, plant and equipment, at fair value(2)
Total assets
Total borrowings
Total liabilities
For the year ended December 31, 2015:
Additions to property, plant and equipment
Hydroelectric
North
America Colombia
Brazil
Wind energy
Other(1) Corporate
Total
North
America
Europe
Brazil
$ 14,058 $ 5,275 $ 2,236
$ 1,726 $ 1,253 $
334 $ 375 $
-
$ 25,257
14,585
6,539
2,473
1,821
1,356
367
414
182
27,737
3,975
1,924
6,530
3,396
260
449
1,006
1,280
627
815
120
123
41
54
2,229
10,182
2,418
15,065
971
4,812
217
7
73
1
18
-
6,099
$ 13,119 $
13,740
3,675
6,226
117
-
-
-
-
-
$ 1,728
$ 1,787 $ 1,201 $
245 $ 278 $
-
$ 18,358
1,954
1,895
1,312
267
315
24
19,507
207
311
373
963
1,284
618
838
105
108
34
76
1,736
7,338
1,901
10,744
10
347
318
284
-
1,449
The following information is about Brookfield Renewable’s equity-accounted investments:
(MILLIONS)
As at December 31, 2016
Hydroelectric
North
America
Colombia
Brazil
Wind energy
Other
Corporate
Total
North
America
Europe
Brazil
$
172 $
-
$
29
$
-
$
5
$
-
$
-
$
-
$
206
As at December 31, 2015
(1)
(2) North America property, plant and equipment totaled $10,013 million and $5,771 million in the United States and Canada, respectively (2015: $9,134 million and $5,772 million).
Includes Co-gen and biomass.
166 $
197
24
7
-
-
-
-
-
$
$
$
$
$
$
$
$
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 113
6. OTHER INCOME
Brookfield Renewable’s other income for the year ended December 31 is comprised of the following:
(MILLIONS)
Interest income and other
Gains on settlement of foreign currency contracts
Gain on disposal(1)
Compensation related to expired Brazilian
concession agreements(2)
$
2016
2015
41 $
23
-
21 $
31
53
2014
10
-
-
-
10
In 2015, the sale of the 102 MW wind facility in California resulted in a gain of $53 million. 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 2015, concession agreements relating to two Brazilian hydroelectric facilities expired. Brookfield Renewable elected not to
renew these agreements in exchange for compensation of $17 million.
17
122 $
-
64 $
$
(1)
(2)
7. 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(1)
Energy marketing fees
Notes
26
2016
553 $
149
313
23
1,038 $
$
$
2015
396 $
119
15
22
552 $
(1) The increase in fuel and power purchase is primarily attributable to our portfolio in Colombia.
8. OTHER
Brookfield Renewable’s other for the year ended December 31 is comprised of the following:
(MILLIONS)
Transaction costs
Change in fair value of property, plant and equipment
Unrealized loss on available-for-sale securities
Other
Notes
3
2016
(22) $
(10)
-
(6)
(38) $
2015
(6) $
(38)
(25)
6
(63) $
$
$
2014
353
130
20
21
524
2014
(17)
9
-
11
3
9. FOREIGN CURRENCY TRANSLATION
Brookfield Renewable’s foreign currency translation for the year ended December 31 shown in the
consolidated statements of comprehensive income is comprised of the following:
(MILLIONS)
Foreign currency translation on
Property, plant and equipment, at fair value
Long-term debt and credit facilities
Deferred income tax liabilities and assets
Other assets and liabilities
Notes
2016
2015
2014
11
$
$
1,186 $
(244)
(157)
201
986 $
(1,975) $
697
202
(62)
(1,138) $
(910)
352
112
(21)
(467)
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 114
10. INCOME TAXES
The major components of income tax recovery (expense) for the year ended December 31 are as follows:
(MILLIONS)
Income tax recovery 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
2016
2015
2014
$
$
$
$
(44) $
(18) $
(18)
71 $
35
(9)
97 $
53 $
87 $
6
(15)
78 $
60 $
30
15
(16)
29
11
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
2016
2015
2014
2 $
(7)
8 $
(17)
12
(8)
(55)
19
(41) $
(263)
(19)
(291) $
(408)
38
(366)
$
$
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
Income or losses recorded not taxable to Brookfield Renewable
Other
2016
2015
$
5 $
(15) $
(9)
(11)
54
14
-
53 $
(15)
10
68
14
(2)
60 $
$
2014
(66)
(16)
8
65
11
9
11
Effective income tax recovery
(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.
Brookfield Renewable’s effective income tax rate was 384.03% for the year ended December 31, 2016
(2015: negative 139.53%). The effective tax rate is more than the statutory rate primarily due to rate
differentials, legislative changes in tax rates during the year, and non-controlling interests’ income not
subject to tax.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 115
The following table details the expiry date, if applicable, of the unrecognized deferred tax assets as at
December 31:
(MILLIONS)
2022 and thereafter
$
2016
98
$
2015
77
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:
Amount available
Difference
Net deferred
(MILLIONS)
As at January 1, 2014
Recognized in Net income (loss)
Recognized in equity
Business combination
Foreign exchange
As at December 31, 2014
Recognized in Net income (loss)
Recognized in equity
Business combination
Foreign exchange
As at December 31, 2015
Recognized in Net income (loss)
Recognized in equity
Business combination
Foreign exchange
$
Non-capital
losses
341 $
46
15
10
(9)
403
73
(1)
5
(22)
458
24
17
-
-
for future
deductions
between tax and
carrying value
110 $
(12)
-
-
(10)
88
(11)
-
-
(12)
65
(10)
-
-
1
(2,599) $
(5)
(366)
(130)
114
(2,986)
16
(279)
(35)
223
(3,061)
83
(48)
(1,020)
(161)
As at December 31, 2016
$
499 $
56 $
(4,207) $
tax (liabilities)
assets
(2,148)
29
(351)
(120)
95
(2,495)
78
(280)
(30)
189
(2,538)
97
(31)
(1,020)
(160)
(3,652)
The deferred income tax liabilities include $2,948 million (2015: $2,924 million) of liabilities which relate to
property, plant and equipment revaluations included in equity.
The taxable temporary difference attributable to Brookfield Renewable’s interest in its subsidiaries,
branches, associates, and joint ventures is $1,380 million (2015: $1,248 million).
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 116
11. 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, 2013
Additions
Notes
Hydroelectric
$ 13,199 $
Wind Other(1)
2,496 $
Total(2)
46 $ 15,741
Acquisitions through business combinations
3
1,341
1,075
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
Acquisitions through business combinations
3
Disposal
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
Additions(3)
Acquisitions through business combinations
Items recognized through OCI
Change in fair value
Foreign exchange
Items recognized through net income
Change in fair value
Depreciation
As at December 31, 2016
3
3
135
79
1,587
(679)
11
(384)
57
(229)
(3)
(160)
-
-
214
2,416
-
1,644
(2)
(910)
1
(4)
9
(548)
$ 15,210 $
3,315 $
41 $ 18,566
183
307
51
624
55
229
289
1,160
-
(230)
-
(230)
1,141
(1,585)
(2)
(407)
52
(336)
(43)
(200)
16
(54)
1,209
(1,975)
-
(9)
(45)
(616)
$
14,847 $
3,233 $
278 $ 18,358
269
5,731
190
1,114
(17)
(565)
71
10
187
21
(10)
(199)
18
-
54
51
(9)
(17)
358
5,741
431
1,186
(36)
(781)
$
21,569 $
3,313 $
375 $ 25,257
(1) Includes biomass and Co-gen.
(2) Includes intangible assets of $14 million (2015: $13 million and 2014: $23 million) and construction work in process (“CWIP”) of
$663 million (2015: $405 million and 2014: $210 million).
(3) Includes $13 million related to the finalization of the Scotland Wind Pipeline purchase price allocation. See Note 3 – Business
combinations.
The fair value of Brookfield Renewable’s property, plant and equipment is calculated as described in
Notes 1(f) - Property, plant and equipment and revaluation method and 1(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 1(o)(iii) - Critical judgments in applying
accounting policies – Property, plant and equipment. Brookfield Renewable has classified its property,
plant and equipment under level 3 of the fair value hierarchy.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 117
Discount rates, terminal capitalization rates and exit dates used in the valuation methodology, are
provided in the following table:
Discount rate
Contracted
Uncontracted
Terminal capitalization rate(1)
Exit date
(1)
North America
Brazil
Europe
2016
2015
2016
2015
2016
2015
4.8% - 5.5% 4.7% - 5.4% 9.2% 9.2%
4.1% - 5.0%
6.6% - 7.2% 6.4% - 7.1% 10.5% 10.5%
5.9% - 6.8%
6.3% - 6.9% 6.3% - 6.9%
2036
2035
N/A
2031
N/A
2033
N/A
2031
5.0%
6.8%
N/A
2031
The terminal capitalization rate applies only to hydroelectric assets in the United States and Canada.
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:
(MILLIONS)
25 bps increase in discount rates
25 bps decrease in discount rates
5% increase in future electricity prices
5% decrease in future electricity prices
25 bps increase in terminal capitalization rate(1)
25 bps decrease in terminal capitalization rate(1)
(MILLIONS)
25 bps increase in discount rates
25 bps decrease in discount rates
5% increase in future electricity prices
5% decrease in future electricity prices
25 bps increase in terminal capitalization rate(1)
25 bps decrease in terminal capitalization rate(1)
( 1 )
$
North
America
(670) $
730
540
(540)
(180)
190
2016
Brazil
Europe
(20) $
20
20
(20)
-
-
(50) $
50
70
(70)
-
-
2015
North
America
Brazil
Europe
$
(670) $
(30) $
(20) $
730
510
(510)
(180)
190
30
50
(50)
-
-
20
10
(10)
-
-
Total
(740)
800
630
(630)
(180)
190
Total
(720)
780
570
(570)
(180)
190
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 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. The
weighted-average remaining duration of the authorization or useful life of a concession asset at
December 31, 2016, is 15 years (2015: 18 years). Consequently, there is no terminal value attributed to
the hydroelectric assets in Brazil. If an additional 20 years of cash flows were included in Brazil, the fair
value of property, plant and equipment would increase by approximately $1,500 million.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 118
The following table summarizes the percentage of total generation contracted under power purchase
agreements:
1 - 10 years
11 - 20 years
North America
63%
46%
Brazil
65%
58%
Europe
85%
34%
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.
North America
Brazil
Europe
$
82 R$
270 €
89
387
90
109
The following table summarizes the estimates of future electricity prices:
Per MWh(1)
1 - 10 years
11 - 20 years
(1)
Assumes nominal prices based on weighted-average generation.
North America
Brazil
Europe
$
73 R$
289 €
124
454
84
101
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. A further one year change would increase or
decrease the fair value of property, plant and equipment by approximately $130 million (2015: $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)
(1)
Includes biomass and Co-gen.
2016
12,761
2,688
319
15,768
$
$
$
$
2015
6,313
2,780
262
9,355
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 119
12. LONG-TERM DEBT AND CREDIT FACILITIES
The composition of debt obligations as at December 31 is presented in the following table:
2016
2015
(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)
Series 10 (C$500)
Credit facilities
Subsidiary borrowings
North America
Colombia
Europe
Brazil
Weighted-average
Term
(years)
Interest
rate (%)
Carrying
value
Estimated Weighted-average
Term
(years)
Interest
rate (%)
Fair
value
Carrying
value
Estimated
Fair
value
5.3
5.8
-
5.1
4.8
3.8
3.6
4.5
1.9
1.8 $
149 $
19.9
-
3.8
5.1
8.4
10.0
111
-
334
298
298
372
158
132
-
368
331
308
380
7.4 $ 1,562 $ 1,677
4.5 $
673 $
673
5.3
5.8
6.1
5.1
4.8
3.8
-
5.0
1.4
2.8 $
145 $
20.9
0.9
4.8
6.1
9.4
-
108
217
325
289
289
-
156
121
225
361
321
290
-
6.5 $ 1,373 $ 1,474
4.5 $
368 $
368
5.3
9.3
3.7
10.4
9.3
6.9
11.1
11.8
5,025
1,937
641
422
5,445
1,958
695
422
5.4
8.9
4,674
5,026
-
3.9
10.1
-
11.0
11.9
-
631
347
-
678
346
6.4
9.0 $ 8,025 $ 8,520
5.5
9.3 $ 5,652 $ 6,050
Total debt
Add: Unamortized premiums(1)
Less: Unamortized financing fees(1)
Less: Current portion
10,260
10,870
7,393
7,892
2
(80)
(1,034)
$ 9,148
4
(59)
(770)
$ 6,568
(1)
Unamortized premiums and unamortized financing fees are amortized to interest expense over the terms of the borrowing.
The following table outlines changes in Brookfield Renewable’s borrowings for the year ended December
31:
Cash flows from
Non-cash
Jan 1 financing activities
Acquisition
Disposal
$ 7,338 $
$ 7,678 $
1,502 $
89 $
1,104 $
391 $
- $
(136) $
Other(1)
238 $
(684) $
Dec 31
10,182
7,338
Includes foreign exchange and amortization of premium and unamortized financing fees.
(MILLIONS)
2016
2015
(1)
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 120
Future repayments of Brookfield Renewable’s debt obligations, for each of the next five years and
thereafter are as follows:
(MILLIONS)
Corporate borrowings and
2017
2018
2019
2020
2021 Thereafter
Total
credit facilities
$
- $
349 $
- $
345 $
462 $ 1,079 $ 2,235
Subsidiary borrowings
North America
Colombia
Europe
Brazil
Unamortized financing fees, net
of unamortized premiums
863
80
54
37
114
92
46
48
181
277
49
49
829
95
55
46
91
741
58
43
2,947
652
379
199
5,025
1,937
641
422
$ 1,034 $
649 $
556 $ 1,370 $ 1,395 $ 5,256
10,260
(78)
10,182
433
$ 10,615
Equity-accounted investments
$
1 $
6 $
5 $
6 $
6 $
409
The following table outlines change in financing fees for the year ended December 31:
(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 and other
Unamortized financing fees, end of year
Total
Corporate borrowings
2016
2015
2014
$
$
$
$
$
5
2
(1)
6
54
41
(17)
(4)
74
80
$
$
$
$
$
5
1
(1)
5
66
7
(15)
(4)
54
59
$
$
$
$
$
6
-
(1)
5
46
39
(13)
(6)
66
71
Corporate borrowings are obligations of a finance subsidiary of Brookfield Renewable, Brookfield
Renewable Partners ULC (“Finco”) (Note 29 - Subsidiary Public Issuers). Finco may redeem some or all
of the borrowings from time to time, pursuant to the terms of the indenture. The balance is payable upon
maturity, and interest on corporate borrowings is paid semi-annually. The term notes payable by Finco
are unconditionally guaranteed by Brookfield Renewable, BRELP and certain other subsidiaries.
In August 2016, Brookfield Renewable issued C$500 million ($383 million) of medium-term corporate
notes, maturing in January 2027 at a fixed rate of 3.63%.
Brookfield Renewable repaid C$300 million ($223 million) of medium-term corporate notes upon maturity
in November 2016.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 121
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. Subsidiary borrowings
in Colombia consist of floating interest rates of Indicador Bancario de Referencia rate (“IBR”), the Banco
Central de Colombia short-term interest rate, or Colombian Consumer Price Index (“IPC”), the Banco
Central de Colombia inflation rate, plus a margin.
In January 2016, Brookfield Renewable and its institutional partners secured non-recourse financing in
the amount of $750 million with respect to the acquisition of Isagen shares. The $750 million of non-
recourse borrowings is comprised of both U.S. dollar and COP term loans and a U.S. dollar revolving
credit facility. The U.S. dollar loans bear an interest rate of LIBOR plus a margin of 2.50% and the COP
loans bear an interest rate of IBR plus 3.90%. All term loans mature in January 2021 while the revolving
credit facility expires in July 2019 (with extension rights). In addition, Isagen had corporate borrowings
with principal balances totaling COP 3,718 billion ($1,104 million). These loans bear floating rate interest
rates with a weighted-average interest rate of 11.44% and a weighted-average remaining term of
approximately 9 years, as at the initial acquisition date. See Note 3 – Business Combinations.
In March 2016, Brookfield Renewable increased indebtedness associated with a 488 MW hydroelectric
portfolio in Ontario through the issuance of C$150 million ($112 million) of bonds. The bonds bear interest
at 3.41% and mature in November 2020.
In March 2016, Brookfield Renewable increased indebtedness associated with a 349 MW hydroelectric
portfolio in Ontario through the issuance of C$50 million ($38 million) of bonds. The bonds bear interest at
3.24% and mature in June 2023.
In March 2016, Brookfield Renewable refinanced the loan associated with its 123 MW wind portfolio in
Portugal by securing €88 million ($98 million) of long-term debt, a €5 million ($6 million) working capital
facility and a €7 million ($8 million) debt reserve facility and simultaneously retired existing indebtedness
of €70 million ($78 million). The long-term debt currently bears interest at the Euro Interbank Offered Rate
(“EURIBOR”) plus a margin of 2.75%.
In April, 2016, concurrent with the closing of the 296 MW hydroelectric portfolio in Pennsylvania,
Brookfield Renewable secured a $315 million financing. The debt currently bears interest at the U.S.
LIBOR plus a margin of 1.50%.
In April 2016, Isagen successfully amended a COP 367 billion ($122 million) loan to extend its maturity to
December 2025.
In May 2016, Brookfield Renewable refinanced a $190 million loan and $9 million letter of credit facility
associated with a 377 MW hydroelectric portfolio in Tennessee and North Carolina. The loan and letter of
credit facility currently bear interest at the U.S. LIBOR plus a margin of 2.75%.
In June 2016, Brookfield Renewable repaid $63 million against a $174 million note purchase agreement
related to a 120 MW wind facility in California. Concurrently, Brookfield Renewable secured a 7-year, $43
million financing on the same asset, resulting in aggregate debt of $154 million. The new debt currently
bears interest at U.S. LIBOR plus a margin of 2.75%.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 122
In August 2016, Brookfield Renewable refinanced a $75 million loan associated with a portfolio of
hydroelectric and wind facilities in the United States held through the Brookfield Americas Infrastructure
fund. The loan currently bears interest at LIBOR plus 2.75% and matures in August 2019.
In August 2016, Brookfield Renewable refinanced indebtedness associated with a 75 MW hydroelectric
portfolio in British Columbia through the issuance of C$80 million ($61 million) of bonds. The bonds bear
interest at 4.45% and mature in August 2026.
In September 2016, Isagen issued COP 300 billion ($101 million) bonds and used part of the proceeds to
repay COP 199 billion ($67 million) existing bonds maturing in the same month. The new bonds comprise
of COP 202 billion ($68 million) at 8.19% fixed interest rate and September 2023 maturity, and COP 98
billion ($33 million) at IPC plus 3.78% interest rate and September 2028 maturity.
In October 2016, Brookfield Renewable completed a financing associated with two wind facilities in
Europe totaling 29 MW by securing £43 million ($55 million) of long-term debt, a £1 million ($1 million)
working capital facility and a £2.5 million ($3 million) debt reserve facility. The long-term debt matures in
2035 and bears interest at the LIBOR plus a margin of 2.20% for the construction phase and reduces to a
margin of 1.90% at the commencement of the operational phase.
In October 2016, Brookfield Renewable completed R$137 million ($44 million) of financing with respect to
a 25 MW hydroelectric facility currently under construction in Brazil. The loan bears interest at a rate of
TJLP plus 2.18% and matures in 2037.
In October 2016, Brookfield Renewable completed a refinancing associated with a 150 MW wind portfolio
in California. The debt comprises of $103 million bond at 3.97% and $109 million bank term loan with
LIBOR plus 1.88% interest rate. The bonds and term loan mature in 2035 and 2034, respectively.
In November 2016, Brookfield Renewable refinanced an $18 million debt associated with a 15 MW
hydroelectric facility in New England. The debt bears interest at the U.S. LIBOR plus a margin of 3.25%
and matures in November 2019.
In December 2016, Brookfield Renewable completed a refinancing associated with a 417 MW
hydroelectric facility in Pennsylvania by issuing $500 million in notes at 4.61%. The notes mature in
December 2026.
Credit facilities
In June 2016, Brookfield Renewable extended the maturity of its corporate credit facilities by one year to
June 30, 2021 and also increased the available amount to $1,690 million from $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. See Note 25 –
Commitments, Contingencies and Guarantees. 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 2017. The interest rate applicable for the $200 million draw made in 2016 is LIBOR
plus 0.8%. See Note 26 – Related Party Transactions.
Brookfield Renewable and its subsidiaries issue letters of credit from some of their credit facilities for
general corporate purposes which include, but are not limited to, security deposits, performance bonds
and guarantees for debt service reserve accounts.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 123
The following table summarizes the available portion of credit facilities as at December 31:
(MILLIONS)
Authorized credit facilities
Draws on credit facilities
Issued letters of credit
Available portion of credit facilities
2016
2015
$
1,890 $
1,760
(673)
(250)
(368)
(218)
$
967 $
1,174
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 124
13. NON-CONTROLLING INTERESTS
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
2016
$
5,589 $
55
2,680
576
2015
2,587
52
2,559
610
$
8,900 $
5,808
Participating non-controlling interests – in operating subsidiaries
The net change in participating non-controlling interests – in operating entities is as follows:
Brookfield
Americas
Brookfield
Brookfield
Infrastructure Infrastructure Infrastructure Catalyst
The Brookfield
Energia
Group Renovável
(MILLIONS)
Fund
Fund II
Fund III
Isagen
institu-
tional
investors
Isagen
public
non-con
-trolling
interests
Other
Total
As at December 31, 2013
$
891 $
207 $
- $ 116 $
46 $
- $
- $ 43 $ 1,303
Net income
OCI
Capital contributions
Distributions
Other
14
54
-
(45)
-
22
187
610
(89)
-
-
-
-
-
-
14
8
-
(12)
-
-
-
-
(3)
(11)
-
-
-
-
-
-
-
-
-
-
1
10
-
-
(1)
51
259
610
(149)
(12)
As at December 31, 2014
$
914 $
937 $
- $ 126 $
32 $
- $
- $ 53 $ 2,062
Net income
OCI
Capital contributions
Distributions
Other
26
89
-
(70)
(1)
27
144
460
(126)
(1)
-
-
-
-
-
14
(12)
-
(7)
-
-
(10)
-
(1)
1
-
-
-
-
-
-
-
-
-
-
2
(7)
-
(4)
1
69
204
460
(208)
-
As at December 31, 2015
$
958 $
1,441 $
- $ 121 $
22 $
- $
- $ 45 $ 2,587
Net (loss) income
OCI
Capital contributions
Acquisition
Distributions
MTO adjustments
(18)
46
-
-
(23)
-
(16)
228
74
-
(73)
-
15
-
1,074
-
(7)
3
16
2
-
-
(12)
-
-
6
-
-
(2)
-
47
148
1,473
-
-
7
19
205
-
1,417
2
-
-
-
65
635
2,621
1,417
-
(2)
(119)
(1,627)
-
(1,617)
As at December 31, 2016
$
963 $
1,654 $
1,085 $ 127 $
26 $ 1,675 $
14 $ 45 $ 5,589
Interests held by third parties
75-80%
50-60%
23-71%
25% 24-30%
53%
0.4% 21-50%
In accordance with IFRS 10, Consolidated Financial Statements, Brookfield Renewable is accounting for
the additional interests in Isagen purchased under the MTOs as an equity transaction related to the
acquisition of non-controlling interest, separate from the Initial Investment of 57.6% controlling interest.
Accordingly, the 42.0% ownership interest in Isagen acquired as part of the MTOs was reflected at fair
value at the acquisition date and, when acquired, was accounted for as an acquisition of non-controlling
interest. The remaining 0.4% ownership interest in Isagen not held by Brookfield Renewable and its co-
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 125
investors as at December 31, 2016 remains as non-controlling interest. See Note 3 – Business
Combinations.
The following tables summarize certain financial information of operating subsidiaries that have non-
controlling interests that are material to Brookfield Renewable:
Brookfield
Americas
Brookfield
Brookfield
Infrastructure Infrastructure Infrastructure The Catalyst
Group
Fund III(1)
Fund II
Fund
Isagen(2)
Other
Total
75-80%
United States
Brazil
50-60%
United States
Brazil
71%
25%
76%
Europe United States United States
Colombia
21-50%
United States
Brazil
Canada
$
$
164 $
18
85
14
211 $
46
422
22
- $
-
-
-
162 $
56
87
14
136 $
34
402 $
49
- $
-
160 $
56
144
247
26
27
-
-
8
14
$ 1,786 $ 4,417 $
1,840
563
628
4,770
1,870
2,236
- $
-
-
-
981 $
1,096
496
512
- $
-
-
-
- $
-
-
-
- $
-
-
-
31 $
3
45
1
568
123
639
51
30 $
8
728
147
(51)
348
2
69
398 $ 7,582
8,115
409
2,973
44
3,437
61
$
958 $ 1,441 $
- $
121 $
- $
67 $ 2,587
$
118 $
(22)
37
394 $
(23)
356
28 $
(8)
(8)
164 $
62
70
819 $
110
502
27 $ 1,550
124
988
5
31
(MILLIONS)
Interests held by third parties
Place of business
For the year ended
December 31, 2014:
Revenue
Net income
Total comprehensive income
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
For the year ended
December 31, 2016:
Revenue
Net (loss) income
Total comprehensive income
As at December 31, 2016:
Property, plant and
equipment, at fair value
Total assets
Total borrowings
Total liabilities
(1)
(2)
$ 1,807 $ 4,816 $
970 $ 5,275 $
5,125
1,881
2,235
Excludes information relating to Isagen which is presented separately.
Summarized financial information relating to Isagen has been presented as a single amount. The total third parties ownership interest in Isagen
as of December 31, 2016 was 75.9% and comprised of Brookfield Infrastructure Fund III: 22.9%, Isagen Institutional investors: 52.6% and
Isagen public non-controlling interests: 0.4%.
1,865
571
631
1,072
450
466
6,539
1,924
3,396
417 $ 14,133
15,884
428
5,180
41
7,107
60
848 $
855
313
319
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 126
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% general partnership interest in BRELP held by Brookfield (“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 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 on a
one for one basis, 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 in all respects, except for the redemption right described above. The
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.
As at December 31, 2016, general partnership units, and Redeemable/Exchangeable partnership units
outstanding were 2,651,506 (December 31, 2015: 2,651,506) and 129,658,623 (December 31, 2015:
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
2016
2015
5 $
19
24 $
4
8
12
232 $
256 $
217
229
$
$
$
$
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 127
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
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)
2016
2015
2014
$
2,452 $
40
1,369
1,628 $
103
5
1,704
203
1,071
-
(29)
-
1
1
55
$ 25,257 $ 18,358
19,507
7,338
10,744
27,737
10,182
15,065
55
2,680
52
2,559
Allocated based on weighted-average GP interest, Redeemable/Exchangeable partnership units and LP Units of 2.7 million, 129.7 million, and
156.4 million, respectively (2015: 2.7 million, 129.7 million, and 143.3 million, respectively and 2014: 2.7 million, 129.7 million, and 138.8 million,
respectively).
Allocated based on outstanding GP interest, Redeemable/Exchangeable partnership units and LP Units of 2.7 million, 129.7 million, and 166.8
million, respectively (2015: 2.7 million, 129.7 million, and 143.2 million, respectively).
(2)
Preferred equity
Brookfield Renewable’s preferred equity as at December 31 consists of Class A Preference Shares of
Brookfield Renewable Power Preferred Equity Inc. (“BRP Equity”) as follows:
(MILLIONS EXCEPT
AS NOTED)
Series 1 (C$136)
Series 2 (C$113)(1)
Series 3 (C$249)
Series 5 (C$103)
Series 6 (C$175)
Shares
outstanding
5.45
4.51
9.96
4.11
7.00
31.03
Cumulative
dividend
rate(%)
Earliest
permitted
redemption
date
Dividends declared
for the year ended
December 31
2016
2015
3.36 Apr 30, 2020 $
3.15 Apr 30, 2020
4.40 Jul 31, 2019
5.00 Apr 30, 2018
5.00 Jul 31, 2018
3 $
3
8
4
7
6 $
2
8
7
7
2016
101 $
84
185
76
130
$
25 $
30 $
576 $
2015
98
81
179
126
126
610
(1) Dividend rate represents annualized distribution based on the most recent quarterly floating rate.
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, 2016, none of the issued Class A Preference Shares have been
redeemed by BRP Equity.
The fixed dividend rate on the Series 1 Preference Shares for the five years commencing May 1, 2015
and ending April 30, 2020, if declared, will be paid at an annual rate of 3.355% (C$0.2096875 per share
per quarter). The holders of the Series 2 Preference Shares will be entitled to receive floating rate
cumulative preferential cash dividends, equal to the T-Bill Rate plus 2.620%. The quarterly dividend in
respect of the November 1, 2016 to January 31, 2017 dividend period was paid on January 31, 2017 at
an annual rate of 3.153% (C$ 0.198683 per share).
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 128
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.
Class A Preference Shares – Normal Course Issuer Bid
In June 2016, Brookfield Renewable announced that the Toronto Stock Exchange had accepted a notice
of BRP Equity’s intention to renew its 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 our Class A Preference Shares. The bid
will expire on June 26, 2017, or earlier should the repurchases be completed prior to such date.
Shareholders may obtain a copy of the notice, free of charge, by contacting Brookfield Renewable.
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.
14. PREFERRED LIMITED PARTNERS’ EQUITY
Brookfield Renewable’s preferred limited partners’ equity comprises of Class A Preferred LP Units as
follows:
(MILLIONS EXCEPT
AS NOTED)
Series 5 (C$72)
Series 7 (C$175)
Series 9 (C$200)
Cumulative
Shares distribution
rate (%)
outstanding
Earliest
permitted
redemption
date
Distributions declared
for the year ended
December 31
2016
2015
2016
2.89
7.00
8.00
17.89
5.59 Apr 30, 2018 $
3 $
- $
49 $
5.50 Jan 31, 2021
5.75 Jul 31, 2021
7
5
1
-
128
147
$
15 $
1 $
324 $
128
2015
-
128
-
As noted in Note 13 – Non-Controlling Interests, in February 2016 a total of 2,885,496 Class A, Series 5
Preference Shares of BRP Equity were tendered and exchanged for an equal number of Series 5
Preferred LP Units of Brookfield Renewable.
The holders of the Series 7 Preferred LP Units are entitled to receive fixed cumulative quarterly
distributions. The distribution rate will reset on January 31, 2021 and every five years thereafter.
On May 25, 2016, Brookfield Renewable issued 8,000,000 Class A, Series 9 Preferred Limited
Partnership Units (the “Series 9 Preferred LP Units”) at a price of C$25 per unit for gross proceeds of
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 129
C$200 million ($152 million). Brookfield Renewable incurred C$7 million ($5 million) in transaction costs
and the net proceeds of C$193 million ($147 million) were used to repay outstanding indebtedness and
for general corporate purposes. The holders of the Series 9 Preferred Units are entitled to receive a
cumulative quarterly fixed distribution yielding 5.75% for the initial period ending July 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 5.01%, and (ii) 5.75%.
The holders of Series 9 Preferred LP Units will have the right, at their option, to convert their Series 9
Preferred LP Units into Class A, Series 10 Preferred LP Units, subject to certain conditions, on July 31,
2021 and every five years thereafter. The holders of Series 10 Preferred LP Units will be entitled to
receive cumulative quarterly floating distributions at an annual rate equal to the cumulative quarterly
floating distributions, as and when declared, at an annual rate equal to the 3-month T-Bill yield plus
5.01%.
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, 2016, none of the Class A Preferred LP Units have been redeemed by
Brookfield Renewable.
15. LIMITED PARTNERS’ EQUITY
Limited partners’ equity
As at December 31, 2016, 166,839,324 LP Units were outstanding (December 31, 2015: 143,188,170)
including 51,125,944 (December 31, 2015: 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, 2016, 298,946 LP Units (2015: 171,605 LP Units) were issued
under the distribution reinvestment plan.
As at December 31, 2016, Brookfield’s direct and indirect interest of 180,784,567 LP Units and
Redeemable/Exchangeable partnership units represents approximately 61% of Brookfield Renewable on
a fully-exchanged basis.
On an unexchanged basis, Brookfield holds a 31% direct limited partnership interest in Brookfield
Renewable, a 44% direct interest in BRELP through the ownership of Redeemable/Exchangeable
partnership units and a direct 1% GP interest in BRELP as at December 31, 2016.
In December 2016, Brookfield Renewable renewed its normal course issuer bid in connection with its LP
Units. Under this normal course issuer bid Brookfield Renewable is permitted to repurchase up to 8.3
million LP Units, representing approximately 5% of the issued and outstanding LP Units, for capital
management purposes. The bid will expire on December 28, 2017, or earlier should Brookfield
Renewable complete its repurchases prior to such date.
Issuance of LP Units
On June 10, 2016, Brookfield Renewable completed a bought deal for non-voting limited partnership units
of Brookfield Renewable (“LP Units”) which included 10,655,000 LP Units at a price of C$37.55 per LP
Unit (the “Offering Price”) for gross proceeds of C$400 million ($313 million) (the “Offering”). In addition,
Brookfield Asset Management purchased 11,098,958 LP Units at the Offering Price concurrent with the
Offering (the “Concurrent Private Placement”). The aggregate gross proceeds of the Offering and the
Concurrent Private Placement was C$800 million ($626 million). Brookfield Renewable had granted the
underwriters an over-allotment option, exercisable in whole or in part for a period of 30 days following
closing of the Offering, to purchase up to an additional 1,598,250 LP Units at the Offering Price (the
“Over-allotment Option”).
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 130
On June 15, 2016, the underwriters exercised in full the Over-allotment Option and Brookfield Renewable
received additional aggregate gross proceeds of C$60 million ($46 million) on June 16, 2016. Brookfield
Asset Management elected not to exercise its option to purchase additional LP Units and holds an
approximate 61% interest in Brookfield Renewable after giving effect to the closing of the Over-allotment
Option.
Brookfield Renewable incurred $15 million in transaction costs associated with the Offering, the
Concurrent Private Placement and the Over-allotment Option.
The excess of the price received over the carrying value of the additional limited partnership units of
BRELP purchased by Brookfield Renewable resulted in adjustments to the 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 of $2 million and $83 million, respectively. BRELP
ultimately used the net proceeds to repay outstanding indebtedness and for general corporate purposes.
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, 2016, Brookfield Renewable declared distributions on its LP Units of
$281 million or $1.78 per LP Unit (2015: $239 million or $1.66 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
2016
83 $
198
281 $
2015
67
172
239
$
$
In February 2016, unitholder distributions were increased to $1.78 per unit on an annualized basis, an
increase of 12 cents per unit, which took effect with the distribution payable in March 2016.
16. GOODWILL
The following table provides a reconciliation of goodwill:
(MILLIONS)
As at December 31, 2015
Acquired through business acquisition
Foreign exchange
As at December 31, 2016
Notes
3
$
$
-
799
97
896
The acquisition equation for the Isagen Acquisition (Note 3 – Business combinations) includes a deferred
tax liability of $1,019 million. The deferred tax liability arises because the tax bases of the Isagen net
assets are significantly lower than their acquisition date fair value. As required by IFRS 3, this deferred
tax liability is calculated in accordance with IAS 12, and is not measured at fair value. IAS 12 requires
provisions to be made for all differences between the carrying value of assets and liabilities other than
goodwill acquired in a business combination and their tax base at their nominal amount, irrespective of
whether or not this will result in additional (or less) tax being paid or when any tax cash flows may occur.
The fair value of the deferred tax liability would be lower than its nominal amount and Brookfield
Renewable has determined that goodwill of $799 million arises from such difference.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 131
17. 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 ratio which is calculated as total debt plus deferred income tax liabilities, net of
deferred income tax assets, and equity. The ratio as at December 31, 2016 was 38% (2015: 39%).
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, 2016, 2015
and 2014.
Brookfield Renewable’s strategy during December 31, 2016, which was unchanged from 2015, 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)
Equity
Total capitalization
Debt to total capitalization
(1)
Deferred income tax liabilities less deferred income tax assets.
2016
2015
$
$
1,034 $
9,148
10,182
3,652
12,672
26,506 $
38%
770
6,568
7,338
2,538
8,763
18,639
39%
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 132
18. 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
2016
114 $
29
58
5
206 $
2015
106
24
60
7
197
The following table outlines the changes in Brookfield Renewable’s equity-accounted investments for the
year ended December 31:
(MILLIONS)
Balance, beginning of year
Share of net income
Revaluation recognized through OCI
Dividends declared
Capital distributions, net
Foreign exchange translation
California Hydro Step Acquisition
Share of OCI
Balance, end of year
$
$
2016
197 $
-
7
(6)
-
7
-
1
206 $
2015
273 $
10
96
(19)
(144)
(19)
-
-
197 $
2014
290
3
56
(27)
-
(11)
(39)
1
273
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 133
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
(MILLIONS)
For the year ended December 31
Revenue
Net income
Share of net income (loss)
Cash earnings
Non-cash loss
19. CASH AND CASH EQUIVALENTS
2016
$
45 $
864
70
42
463
71
2015
45
848
65
37
460
73
2016
2015
2014
$
74 $
-
9
(9)
89 $
19
20
(10)
Brookfield Renewable’s cash and cash equivalents as at December 31 are as follows:
(MILLIONS)
Cash
Short-term deposits
20. RESTRICTED CASH
Brookfield Renewable’s restricted cash as at December 31 is as follows:
(MILLIONS)
Operations
Credit obligations
Development projects
Total
Less: non-current
Current
2016
210 $
13
223 $
$
$
2016
$
135 $
104
11
250
(129)
$
121 $
Refer to Note 22 – Other long-term assets for information on long-term restricted cash.
109
6
26
(23)
2015
60
3
63
2015
183
110
43
336
(138)
198
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 134
21. 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
2016
262 $
103
89
2015
98
87
71
454 $
256
$
$
As at December 31, 2016, 95% (2015: 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, 2016 and 2015 an allowance for doubtful accounts for trade receivables was not deemed
necessary.
22. 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
Unamortized financing fees
Other
Cost
Accumulated
Amortization Net Book Value Net book value
2015
2016
129
$
-
$
129
$
138
38
46
213
$
(32)
(5)
(37)
6
41
8
29
$
176
$
175
$
$
At December 31, 2016 and 2015, restricted cash was held primarily to satisfy lease payments and credit
agreements.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 135
23. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Brookfield Renewable’s accounts payable and accrued liabilities as at December 31 are as follows:
(MILLIONS)
Operating accrued liabilities
Accounts payable
Interest payable on corporate and subsidiary borrowings
Deferred consideration
Acquisition related provisions
LP Unitholders’ distributions, preferred limited partnership unit
distributions and preferred dividends payable(1)
Other
2016
$
141 $
2015
107
92
68
55
54
24
33
43
44
38
-
19
33
(1)
284
Includes amounts payable only to external LP Unitholders. Amounts payable to Brookfield are included in due to related
parties. Refer to Note 26 - Related party transactions.
467 $
$
24. OTHER LONG-TERM LIABILITIES
Brookfield Renewable’s other long-term liabilities as at December 31 are comprised of the following:
(MILLIONS)
Acquisition related provisions
Pension obligations
Decommissioning retirement obligations
Contingent consideration
Concession payment liability
Other
Notes
2016
116
$
$
28
3
87
47
16
10
34
2015
-
56
47
32
9
28
172
Brookfield Renewable has recorded decommissioning retirement obligations associated with certain
power generating assets. The decommissioning retirement obligation has been established for
hydroelectric and wind operation sites in North America that are expected to be restored between the
years 2031 to 2138. The estimated cost of decommissioning activities is based on a third party
assessment.
310
$
$
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 136
25. 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 December 2016, Brookfield Renewable with institutional partners entered into an agreement to acquire
a hydroelectric portfolio with an aggregate capacity of 210 MW located in Europe for a total enterprise
value of €255 million. The transaction is subject to certain conditions including regulatory consent and
other customary closing conditions and is expected to close in the second quarter of 2017. Brookfield
Renewable will retain an approximate 29% economic interest in the portfolio.
The remaining development project costs on two Brazilian hydroelectric projects totaling 47 MW and two
wind projects totaling 43 MW in Europe are expected to be $125 million. One hydroelectric project with a
capacity of 28 MW and the two wind projects are expected to be fully operational in 2017. The 19 MW
hydroelectric project is expected to be fully operational in 2018. The remaining construction costs
associated with the 25 MW hydroelectric facility commissioned in Brazil subsequent to year end are
expected to be $8 million.
As at December 31, 2016, Brookfield Renewable had commitments for future minimum lease payments
under non-cancellable leases which fall due as follows:
(MILLIONS)
2017
2018
2019
2020
2021
Thereafter
Total
Contingencies
$
$
29
28
27
26
25
219
354
Brookfield Renewable and its subsidiaries are subject to various legal proceedings, arbitrations and
actions arising in the normal course of business. While the final outcome of such legal proceedings and
actions cannot be predicted with certainty, it is the opinion of management that the resolution of such
proceedings and actions will not have a material impact on Brookfield Renewable’s consolidated financial
position or results of operations.
Brookfield Renewable, on behalf of Brookfield Renewable’s subsidiaries, and the subsidiaries themselves
have provided letters of credit, which include, but are not limited to, guarantees for debt service reserves,
capital reserves, construction completion and performance. The activity on the issued letters of credit by
Brookfield Renewable can be found in Note 12 – Long-term debt and credit facilities.
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, 2016, letters of credit issued by Brookfield Renewable along
with institutional investors were $66 million (December 31, 2015: $71 million).
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 137
Brookfield Renewable’s subsidiaries and 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, 2016, letters of credit issued by Brookfield
Renewable’s subsidiaries and equity-accounted entities were $483 million and $16 million, respectively
(December 31, 2015: $118 million and $16 million, respectively).
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.
26. 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 have entered into, or amended, the following material agreements:
Principal Agreements
Limited Partnership Agreements
Each of the amended and restated limited partnership agreements of Brookfield Renewable and BRELP
outline the key terms of the partnerships, including provisions relating to management, protections for
limited partners, capital contributions, distributions and allocation of income and losses. BRELP’s general
partner is entitled to receive incentive distributions from BRELP as a result of its ownership of the general
partnership interest in BRELP. The incentive distributions are to be calculated in increments based on the
amount by which quarterly distributions on the limited partnership units of BRELP exceed specified target
levels as set forth in the amended and restated partnership agreement.
Master Services Agreement
Brookfield Renewable entered into an agreement with Brookfield 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, 2016 is $12 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, 2016 of $62 million (2015: $48
million, 2014: $51 million).
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 138
BRELP Voting Agreement
In 2011, Brookfield Renewable entered into a voting agreement with Brookfield pursuant to which
Brookfield Renewable, through BRPL, has a number of voting rights, including the right to direct all
eligible votes in the election of the directors of BRELP’s general partner.
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.
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 third-party power agreements. The agreement with Brookfield has an initial term
to 2029 and automatically renews for successive 20-year period with certain termination provisions.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 139
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 7 - Direct operating costs.
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%.
Brookfield Renewable entered into a voting agreement with certain Brookfield subsidiaries that form part
of Brookfield Infrastructure Fund III (the “BIF III Entities”) in which Brookfield Renewable holds
investments in certain United States and Colombia 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 III Entities. Brookfield Renewable’s economic interests in the BIF III Entities are
between 24% and 29%.
The consortium holds its interest in Isagen through an entity (“Hydro Holdings”) which is entitled to
appoint a majority of the board of directors of Isagen. The general partner of Hydro Holdings is a
controlled subsidiary of Brookfield Renewable. Brookfield Renewable is entitled to appoint a majority of
Hydro Holdings’ board of directors, provided that Brookfield Asset Management and its subsidiaries
(including Brookfield Renewable) collectively are (i) the largest holder of Hydro Holdings’ limited
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 140
partnership interests, and (ii) hold over 30% of Hydro Holdings’ limited partnership interests (the
“Ownership Test”). Brookfield Asset Management and its subsidiaries currently meet the Ownership Test.
A subsidiary of Brookfield Renewable sold electricity to, and had it distributed by, Brookfield Infrastructure
Partners L.P.’s (“Brookfield Infrastructure”) Colombian regulated distribution business as part of its normal
course of operations. For the year ended December 31, 2016, revenues of $12 million were generated
and expenses of $1 million were incurred. There were no revenues generated or expenses incurred in
fiscal 2015 or 2014.
Brookfield Asset Management has provided a $200 million committed unsecured revolving credit facility
maturing in December 2017. In December 2016, there was a draw for the full amount. See Note 12 –
Long-term debt and credit facilities for further details. Subsequent to year-end, the facility increased to
$400 million. The interest expense on this facility, for the year ended December 31, 2016, was less than
$1 million.
Brookfield has placed funds on deposit with Brookfield Renewable, subsequent to year-end and in the
amount of $140 million. Interest earned on the deposits is at market terms.
The following table reflects the related party agreements and transactions in 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
2016
2015
2014
527 $
469 $
8
6
535 $
475 $
(3) $
(5) $
(23)
(40)
(66) $
(62) $
(22)
(30)
(57) $
(48) $
433
6
439
(9)
(21)
(29)
(59)
(51)
$
$
$
$
$
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 141
The following table reflects the impact of the related party agreements and transactions on the
consolidated statements of financial position as at December 31:
Related party
2016
2015
(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
$
$
$
47 $
7
54 $
52
5
57
48 $
41
26
2
23
-
$
76 $
64
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.
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
2016
$
30
$
(160)
(7)
2015
(72)
2
8
$
(137)
$
(62)
$
$
2014
20
(54)
14
(20)
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 142
28. 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
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.
responsible
(BRGC)
for
is
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. In the Colombian platform, there are obligations for pension plans and other employee
benefits. Actuarial valuations on these obligations are performed annually by qualified, independent
actuaries.
The dates of the most recent actuarial valuations for Brookfield Renewable’s pension and non-pension
benefit plans range from December 2013 to January, 2017. 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
pension plans benefit plans
pension plans benefit plans
2014
2015
(%)
(%)
pension plans benefit plans
2016
(%)
Discount rate
Rate of price inflation
Rate of compensation
increases
Health care trend rate(1)
(1)
Assumed immediate trend rate at year-end.
2.2 - 7.3
1.5 - 3.5
2.5 - 4.0
N/A
4.1 - 7.3
N/A
2.5 - 4.0
5.3 - 6.9
2.9 - 4.7
2.0 - 2.5
2.5 - 3.0
N/A
4.2 - 4.7
N/A
2.5 - 3.0
6.3 - 7.1
2.6 - 4.2
2.0 - 2.5
2.5 - 4.0
N/A
4.0 - 4.3
N/A
3.0 - 4.0
6.5 - 7.2
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, 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 determined, as far as possible, by reference to market
yields on high quality corporate bonds. In Colombia deep market in bonds does not exist, accordingly, the
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 143
discount rate is determined by reference to yields on government bonds. 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, 2016, would result in the following increase (decrease) of the benefit
obligations:
(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
(10)
11
5
(5)
N/A
N/A
(4)
4
N/A
N/A
3
(3)
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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 144
Expense recognized in the consolidated statements of income and consolidated statements of
comprehensive income for the year ended December 31:
(MILLIONS)
Current service costs
Past service costs (recovery)
Interest expense
Administrative expenses
Recognized in consolidated
statement of income
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
Total
Defined benefit Non-pension Defined benefit Non-pension Defined benefit Non-pension
pension plans benefit plans
pension plans benefit plans
2014
2015
3
3
$
$
1
1
-
1
1
1
pension plans benefit plans
2016
3
$
-
2
1
1
(1)
2
-
1
-
3
-
1
2
1
-
$
$
$
6
4
6
2
5
4
(2)
-
(1)
-
(4)
-
(1)
(1)
2
(5)
1
2
5
-
1
-
(2)
2
(1)
-
8
(2)
$
2
8
$
-
4
$
1
7
$
(6)
(4)
$
3
8
$
3
-
5
9
The amounts included in the consolidated statements of financial position 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
2016
2015
2014
$
$
158
(119)
39
$
$
53
(5)
48
$
$
124
(103)
21
$
$
35
-
35
$
$
128
(108)
20
$
$
43
-
43
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 145
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
$
2016
$
124
3
-
7
$
35
1
-
3
2015
$
128
3
1
5
$
43
1
(1)
2
2014
$
80
3
1
4
27
1
2
1
demographic assumptions
(1)
(1)
2
(5)
1
2
Actuarial changes arising
from changes in
financial assumptions
Experience adjustments
Benefits paid
Business combination
Exchange differences
Balance, end of year
5
-
(8)
25
3
158
$
1
-
(2)
14
2
53
$
(2)
2
(5)
-
(10)
124
$
(1)
-
(2)
-
(2)
35
$
8
(2)
(4)
42
(5)
128
$
3
-
(1)
10
(2)
43
$
Expected employer’s contributions to the defined benefit plans for the year ended December 31, 2017 are
$9 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
$
$
2016
$
103
5
2
7
9
(8)
1
119
-
-
-
3
4
(2)
-
5
$
$
2015
$
108
4
1
5
-
(5)
(10)
103
-
-
-
2
-
(2)
-
-
$
$
2014
$
74
4
4
8
28
(4)
(6)
108
$
$
$
The composition of plan assets as at December 31 is as follows:
Asset category:
Cash and cash equivalents
Equity securities
Debt securities
Real estate
2016
(%)
5
50
44
1
100
-
-
-
1
-
(1)
-
-
2015
(%)
1
58
40
1
100
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 146
29. SUBSIDIARY PUBLIC ISSUERS
The following tables provide consolidated summary financial information for Brookfield Renewable, BRP
Equity, and Finco:
(MILLIONS)
As at December 31, 2016:
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, 2015:
Brookfield
Renewable(1)
BRP
Equity
Finco
Holding
Entities(2) Subsidiaries(3)
Brookfield
Other Consolidating Renewable
adjustments(4) consolidated
$
26 $
- $ 1,581 $
150 $ 2,092
$
(2,942) $
907
3,779
620
-
18,415
27,250
(23,234)
26,830
33
-
9
-
19
2,971
1,644
(2,943)
1,733
1,556
738
12,775
(1,737)
13,332
-
-
-
-
324
-
576
-
-
-
-
-
-
5,589
-
5,589
2,680
-
324
-
-
-
-
-
(324)
2,680
576
324
Current assets
Long-term assets
Current liabilities
Long-term liabilities
$
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
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
(1)
(2)
-
-
-
-
128
-
610
-
-
-
-
-
-
2,587
-
2,587
2,559
-
128
-
-
-
-
-
(128)
2,559
610
128
Includes investments in subsidiaries under the equity method.
Includes BRELP, BRP Bermuda Holdings I Limited (“Latam Holdco”), Brookfield BRP Holdings (Canada) Inc. (“NA Holdco”)
and Brookfield BRP Europe Holdings Limited (“Euro Holdco”), together the “Holding Entities”.
Includes subsidiaries of Brookfield Renewable, other than BRP Equity, Finco and the Holding Entities.
Includes elimination of intercompany transactions and balances necessary to present Brookfield Renewable on a
consolidated basis.
(3)
(4)
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 147
Brookfield
Renewable(1)
BRP
Equity
Holding
Other Consolidating Renewable
Finco Entities(2) Subsidiaries(3) adjustments(4) consolidated
Brookfield
$
$
$
- $
- $
- $
1 $
2,451 $
- $
2,452
(20)
-
(1)
(100)
558
(397)
40
- $
- $
- $
8 $
1,620 $
- $
1,628
2
-
(1)
(42)
235
(91)
103
- $
- $
- $
- $
1,704 $
- $
1,704
58
-
(1)
187
438
(479)
203
(MILLIONS)
For the year ended
December 31, 2016
Revenues
Net income (loss)
For the year ended
December 31, 2015
Revenues
Net income (loss)
For the year ended
December 31, 2014
Revenues
Net income (loss)
(1)
(2)
(3)
(4)
Includes investments in subsidiaries under the equity method.
Includes the Holding Entities.
Includes subsidiaries of Brookfield Renewable, other than BRP Equity, Finco, and the Holding Entities.
Includes elimination of intercompany transactions and balances necessary to present Brookfield Renewable on a
consolidated basis.
See Note 12 – Long-term debt and credit facilities for additional details regarding the medium-term
corporate notes issued by Finco. See Note 13 – Non-controlling interests for additional details regarding
Class A Preference Shares issued by BRP Equity.
30. SUBSEQUENT EVENTS
On February 2, 2017, Brookfield Renewable and Brookfield agreed to increase the committed unsecured
revolving credit facility provided by Brookfield to $400 million.
On February 14, 2017, Brookfield Renewable issued 10,000,000 Class A, Series 11 Preferred Limited
Partnership Units (the “Series 11 Preferred LP Units”) at a price of C$25 per unit for gross proceeds of
C$250 million ($190 million). The holders of the Series 11 Preferred Units are entitled to receive a
cumulative quarterly fixed distribution yielding 5.0% for the initial period ending April 30, 2022. 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 3.82%, and (ii) 5.00%.
On February 27, 2017, Brookfield Renewable with institutional partners entered into an agreement to
acquire a construction ready 16 MW wind facility in Northern Ireland expected to generate 36 GWh for a
total enterprise value of £27 million ($34 million). The transaction is subject to regulatory approvals and
other customary closing conditions and is expected to close in the third quarter of 2017. Brookfield
Renewable will retain approximate 40% economic interest in the portfolio.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2016
Page 148
GENERAL INFORMATION
Corporate Office
73 Front Street
Fifth Floor
Hamilton, HM12
Bermuda
Tel: (441) 294-3304
Fax: (441) 516-1988
https://bep.brookfield.com
Officers of Brookfield
Renewable Partners L.P.’s
Service Provider, BRP
Energy Group L.P.
Richard Legault
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 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: BEP.PR.I (Preferred LP Units – Series 9)
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)
Brookfield
Investor Information
Visit
at
https://bep.brookfield.com for more information. The
2016 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.
Renewable
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
enquiries@brookfieldrenewable.com
BROOKFIELD RENEWABLE PARTNERS L.P.
bep.brookfield.com
NYSE: BEP
TSX: BEP.UN