Brookfield Renewable
Partners L.P.
2 0 1 7 A N N U A L R E P O R T
OUR OPERATIONS
We invest in renewable assets directly, as well as with institutional partners, joint venture partners
and through other arrangements. Our portfolio of assets has approximately 16,400 megawatts (“MW”) of
capacity and annualized long-term average (“LTA”) generation of approximately 50,100 gigawatt hours
(“GWh”), in addition to a development pipeline of approximately 7,000 MW, making us one of the largest
pure-play public renewable companies in the world. We leverage our extensive operating experience to
maintain and enhance the value of assets, grow cash flows on an annual basis and cultivate positive
relations with local stakeholders. The table below outlines our portfolio as at December 31, 2017:
River
Systems
Facilities
Capacity
(MW)
LTA(1)
(GWh)
Hydroelectric
North America(2)
United States
Canada
Colombia(3)
Brazil(4)
Wind(5)
United States
Canada
Europe
Brazil
Other
Solar(6)
Storage(7)
30
19
49
6
26
81
-
-
-
-
-
-
-
-
2
136
33
169
6
42
217
24
4
28
23
19
6
76
537
4
2,886
1,361
4,247
2,732
899
7,878
1,888
484
2,372
513
457
250
3,592
1,511
2,698
Storage
Capacity
(GWh)
2,523
1,261
3,784
3,703
-
7,487
-
-
-
-
-
-
-
-
11,982
5,177
17,159
14,476
4,647
36,282
6,426
1,435
7,861
1,313
1,777
412
11,363
2,492
-
5,220
(1)
(2)
(3)
Other(8)
7
841
-
50,137
690
16,369
-
-
12,707
83
LTA is calculated on a consolidated and an annualized basis from the beginning of the year, regardless of the acquisition or
commercial operation date. See “Part 4 – Financial Performance Review on Proportionate Information” for an explanation on
the Solar and Storage segment introduced this year, why we do not consider long-term average generation for our Storage
and Other facilities, and explanation on the calculation and relevance of proportionate information.
North America hydroelectric LTA is the expected average level of generation based on 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 based on 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.
(4)
Hydroelectric assets located in Brazil benefit from a market framework which levelizes generation risk across producers.
(5) Wind LTA is the expected average level of generation based on the results based on simulated historical wind speed data
performed over a period of typically 10 years.
Solar LTA is the expected average level of generation based on the results of a simulation using historical irradiance levels in
the locations of our projects from the last 14 to 20 years combined with actual generation data during the operational period.
Includes pumped storage in North America (600 MW) and Europe (2,088 MW) and battery storage in North America (10 MW).
Includes four biomass facilities in Brazil (175 MW), one Co-gen plant in Colombia (300 MW), and two Co-gen plants in North
America (215 MW).
(7)
(8)
(6)
The following table presents the annualized long-term average generation of our portfolio as at
December 31, 2017 on a consolidated and quarterly basis:
GENERATION (GWh)(1)
Q1
Q2
Q3
Q4
Total
Hydroelectric
North America(2)
United States
Canada
Colombia(3)
Brazil(4)
Wind(5)
North America
United States
Canada
Europe
Brazil
Other
Solar(6)
3,404
1,228
4,632
3,508
1,147
9,287
3,474
1,508
4,982
3,509
1,159
9,650
2,178
1,223
3,401
3,571
1,170
8,142
2,926
1,218
4,144
3,888
1,171
9,203
1,738
1,728
1,288
1,672
400
345
273
417
2,138
2,073
1,561
2,089
393
334
113
283
393
117
252
588
75
385
462
107
11,982
5,177
17,159
14,476
4,647
36,282
6,426
1,435
7,861
1,313
1,777
412
2,978
2,866
2,476
3,043
11,363
521
720
747
504
2,492
(2)
Total
(1)
50,137
12,786
LTA is calculated on a consolidated and an annualized basis from the beginning of the year, regardless of the acquisition or
commercial operation date.
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.
(4)
Hydroelectric assets located in Brazil benefit from a market framework which levelizes generation risk across producers.
(5) Wind LTA is the expected average level of generation, as obtained from the results based on simulated historical wind speed
12,750
11,365
13,236
(3)
(6)
data performed over a period of typically 10 years.
Solar LTA is the expected average level of generation based on the results of a simulation using historical irradiance levels in
the locations of our projects from the last 14 to 20 years combined with actual generation data during the operational period.
The following table presents the annualized long-term average generation of our portfolio as at
December 31, 2017 on a proportionate and quarterly basis:
GENERATION (GWh)(1)
Q1
Q2
Q3
Q4
Total
Hydroelectric
North America(2)
United States
Canada
Colombia(3)
Brazil(4)
Wind(5)
North America
United States
Canada
Europe
Brazil
Other
Solar(6)
2,225
1,214
3,439
844
958
2,361
1,461
3,822
844
968
1,470
1,184
2,654
859
978
1,953
1,192
3,145
935
978
8,009
5,051
13,060
3,482
3,882
5,241
5,634
4,491
5,058
20,424
361
336
697
155
111
35
998
94
416
300
716
112
132
36
996
130
300
243
543
100
203
23
869
142
337
355
692
153
163
33
1,414
1,234
2,648
520
609
127
1,041
3,904
91
457
(2)
Total
(1)
24,785
6,333
LTA is calculated on a proportionate and an annualized basis from the beginning of the year, regardless of the acquisition or
commercial operation date.
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.
(4)
Hydroelectric assets located in Brazil benefit from a market framework which levelizes generation risk across producers.
(5) Wind LTA is the expected average level of generation, as obtained from the results based on simulated historical wind speed
5,502
6,760
6,190
(3)
(6)
data performed over a period of typically 10 years.
Solar LTA is the expected average level of generation based on the results of a simulation using historical irradiance levels in
the locations of our projects from the last 14 to 20 years combined with actual generation data during the operational period.
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 and in other filings with the U.S. Securities and Exchange Commission (“SEC”) and with securities regulators in Canada - 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 continue to advance our strategy of growing our renewables business on a value enhancing
basis. Now in our 20th year of operations and having delivered a 17% compound annual growth rate
since inception, we are looking towards continued growth.
Our strategy is simple – acquire renewable power assets and businesses at below intrinsic value,
finance our investments on an investment grade basis, and optimize cash flow and value utilizing our
depth of operating expertise. This strategy has proved to be effective over many years and through
cycles. Looking ahead, we believe the opportunity to create value for our unitholders will only increase as
the world transitions away from carbon producing power sources.
This transition will take many decades, enormous amounts of global investment and significant
expertise. The world’s advanced economies are still in the very early stages of replacing much of the
thermal centralized generation with a mix of centralized and decentralized renewable technologies. As a
result, we have made a concerted effort to ensure our business is well positioned to prosper during this
transition.
Over the last 5 years, we have diversified the business into a global, multi-technology, renewable
power owner and operator. During this period, we have grown our FFO per unit by 8% annually and
increased our distribution per unit by 6% per year. More importantly, we have embedded the business
with significant upside in the future. We now have substantial businesses in North and South America,
Europe and Asia that will support future growth in multiple markets and will allow us to focus our
investment in regions where the risk-return proposition is strongest. We also have operating expertise
across hydro, wind, solar, storage and distributed generation assets and we have amassed a 7,000
megawatt development pipeline which we expect to provide, over time, excellent investment opportunities
at premium returns. Lastly, we have maintained a strong balance sheet characterized by a high level of
liquidity, financial flexibility, access to multiple sources of capital and an investment grade profile.
2017 was a particularly strong year for the business. We delivered a total return to our shareholders
of approximately 25% during the year and the business continued to perform well with all of our
operational groups delivering on asset availability, development and margin maximization targets. These
factors, combined with above average generation, resulted in a 31% increase in FFO per unit over the
prior year.
Highlights from the year include the following:
• Deployed approximately $625 million of BEP equity in new transactions and development, in line
with our target returns
• Commissioned 75 megawatts of new capacity, while progressing an additional 248 megawatts of
construction and advanced stage projects that are expected to enter commercial operations over
the next four years
• Added scale solar, wind, storage, and distributed generation assets to our portfolio in our core
markets in North America, while making small investments in India and China, establishing an
operating presence in these markets to support future growth
• Maintained robust liquidity, ending the year with in excess of $1.5 billion of available liquidity,
through accessing multiple sources of liquidity and monetizing select mature assets for value
Distribution Increase
In light of the above mentioned results, and with the strong growth ahead of us, we are pleased to
announce that our Board of Directors has declared a 5% increase to BEP’s quarterly distribution, bringing
our annual payout to $1.96 per unit.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 1
Transaction Update
In the fourth quarter, we and our institutional partners closed the acquisitions of 51% of TerraForm
Power and 100% of TerraForm Global. Combined, these two transactions added 3,600 megawatts of long
duration, contracted solar and wind assets to our portfolio. The assets are fully operational and virtually all
recently built with an average portfolio age of approximately 5 years. The assets are located primarily in
our core markets of the United States, Canada and Brazil, while also adding small portfolios of operating
assets in India and China.
Since our acquisition, we have taken meaningful strides to both strengthen TerraForm Power’s
balance sheet and grow the business. Subsequent to close of our transaction, TerraForm Power
executed a broad refinancing plan by purchasing and reissuing $1.6 billion of new unsecured and
secured bonds. This transaction extended the company’s overall maturity profile to 10 years, greatly
improved overall financial flexibility through improved covenants, and reduced annual interest costs by
almost $20 million. In early February, TerraForm Power announced a $1.2 billion offer to acquire 100% of
Saeta Yield – a 1,028 megawatt European solar and wind portfolio. The transaction is expected to be
accretive on day one to existing shareholders and should provide compelling opportunities for follow on
investment.
Since closing the acquisition TerraForm Global, we have begun the process of integrating the assets
into our existing operations in Brazil and establishing new offices and advancing growth opportunities in
India and China.
Operating and Financial Results
We remain focused on driving cash flow growth from existing operations. This includes inflation
escalations in our contracts, margin expansion through revenue growth and cost reduction initiatives, as
well as building out our development pipeline at premium returns. These operational levers underpin our
5% to 9% target distribution growth.
In 2017, we delivered FFO of $581 million, a 31% per unit increase over the prior year, supported by
advancement of our organic growth initiatives, improvement in generation levels from our assets and
contributions from new acquisitions.
Our revenues continue to be largely contracted across the business, with approximately 90% of
generation contracted and an average power purchase agreement term of over 15 years. Combining this
with our very stable cost profile, we benefit from a high degree of margin predictability with the only
meaningful variance to results being the underlying generation resource i.e. the amount of wind that
blows and water that flows. The small exposure we do have to market prices is primarily within our hydro
assets which, during the year, reported $686 million of FFO supported by generation above long term
average. Generation in North America was particularly strong (7% above average) and we ended the
year with reservoirs above long term average levels. In Brazil, our energy marketing team actively
managed our power to protect the business against low hydrology while capturing higher prices.
Accordingly, we secured new power purchase agreements for both existing assets and development sites
at average prices of R$230 per megawatt-hour. In the fourth quarter, we secured a 30-year power
purchase agreement that begins in 2023 at an inflation indexed price of R$221 per megawatt-hour for our
30 megawatt hydro site located in the southeast of the country. We expect to commence construction on
this project in 2018. Generation in Colombia was above average during 2017. Our priority in this market
continues to be the creation of longer term contract market. We signed nine power purchase agreements
during the year with average term of between five and ten years. Although volumes remain small, we are
making progress in this regard.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 2
Our wind facilities delivered $105 million of FFO in 2017. Generation in our wind fleet was 9% below
the long-term average during the year with much of the shortfall in North America. Our portfolio in Brazil
continues to outperform our expectations with capacity factors that regularly exceed 40%. We were
fortunate to add further wind assets to this portfolio during the year through the acquisition of TerraForm
Global. In Europe, we continue to build our wind business largely through a development strategy that
generates mid-teen returns in a market where operating assets trade at very high multiples. We
monetized two wind farms during the year to take advantage of this value differential, repatriating $150
million to our investors in the projects ($60 million to BEP) and crystalizing a 35% return on our invested
capital.
Our solar portfolio consists of over 1,000 megawatts of utility-scale solar and 400 megawatts of
distributed solar generation. The vast majority of these assets are located in the United States and are
supported by high quality, utility grade contracts with an average term of 18 years. These facilities were
acquired in the fourth quarter through our Terraform Power and Global acquisitions, and therefore
contributing modestly to FFO in 2017. In 2018, these assets are poised to contribute strongly to our
performance. The recent tariffs in the United States associated with solar panels will likely modestly slow
the pace of development in the near term and, at a minimum, will increase installed system costs. This
will reflect well on in place assets. In spite of this, we do not think these tariffs will have significant long
term impact on the adoption of solar as a bulk energy provider given how dramatically costs have
declined in the last decade (far offsetting the impact of tariffs), the simplicity of the technology and speed
at which it can be developed, and its obvious environmental attributes. Accordingly, we remain focused
on growing this part of our business through both acquisition and development.
We own and operate interests in three pumped storage facilities in the U.S. and U.K. which
contributed $18 million to FFO in 2017. We made our first investment into the European storage sector
this year with the acquisition of our interest in the 2,100 megawatt First Hydro pumped storage portfolio in
the third quarter. These assets benefit from revenues that are tied largely to critical ancillary services
which help stabilize the grid and provide the market with back-up power. As a result, they represent a
very stable source of cash flow which is not correlated to market prices. We believe that the value of
these storage assets in the U.S. and the U.K. will benefit over time from further penetration of intermittent
wind and solar assets into the grid (replacing baseload generation) and even with the advancement of
batteries, these assets are unique given their size, scale and speed at which they can deliver the various
grid stabilization services.
Liquidity
We remain focused on a conservative financing strategy to ensure cash flow resiliency through the
cycle. We maintain a disciplined funding approach and our liquidity position at year end exceeds $1.5
billion. In 2017, we continued to access multiple sources of capital, including through the preferred equity
and equity capital markets, in addition to completing several up-financing initiatives. We completed $1.6
billion of project level refinancings, including the issuance of three green bonds for an aggregate value of
$1.1 billion. As with the sale of the two Irish wind farms this year, the strategy of redeploying recycled
capital from mature de-risked assets into new, value based opportunities is one that we expect to execute
on opportunistically going forward.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 3
Outlook
As we look to 2018, we remain focused on progressing our key priorities including advancing our
development pipeline, surfacing margin expansion opportunities, and assessing select contracting
opportunities across the portfolio. We believe the renewables investment environment remains favorable,
and continue to advance our transaction pipeline.
With our largely perpetual asset base, high cash margins, organic growth levers, robust transaction
pipeline, investment grade balance sheet, ample liquidity and access to capital, we believe that we have
built a business that is able to generate strong returns over the long term. Nevertheless, we remain
focused on growing the business prudently and are committed to delivering total returns to unitholders,
over the long term, of 12% to 15% per unit.
On a final note, on behalf of our employees and directors, we would like to express our sincerest
appreciation to our shareholders and many business partners for your contributions to our success.
Thank you for your continued support, and we look forward to updating you on our progress in 2018.
Sincerely,
Sachin Shah
Chief Executive Officer
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 4
OUR COMPETITIVE STRENGTHS
Brookfield Renewable Partners L.P. ("Brookfield Renewable") is a globally diversified, multi-
technology, owner and operator of renewable power assets.
Our business model is to utilize our global reach to acquire and develop high quality renewable
power assets below intrinsic value, finance them on a long-term, low-risk and investment grade basis
through a conservative financing strategy and then optimize cash flows by applying our operating
expertise to enhance value.
One of the largest, public pure play renewable businesses globally. Brookfield Renewable
operates and invests in a large, multi-technology and globally diversified portfolio. Brookfield Renewable
invests in renewable assets directly, as well as with institutional partners, joint venture partners and in
other arrangements. Our portfolio consists of 16,369 MW of installed capacity largely across four
continents, a development pipeline of approximately 7,000 MW, and annualized long-term average
generation on a proportionate basis of 24,785 GWh.
The following charts illustrate annualized long-term average generation on a proportionate basis:
Source of Energy
Solar
2%
Wind
16%
Hydro
82%
Region
Europe
and Other
5%
Colombia
15%
Brazil
20%
North
America
60%
Diverse and high quality assets with hydroelectric focus. Brookfield Renewable has a
complementary portfolio of hydroelectric, wind, solar and storage facilities. Our portfolio includes utility-
scale facilities, back-up storage power, and localized power generation. Hydroelectric power comprises
the significant majority of our portfolio, and is the highest value renewable asset class as one of the
longest life, lowest-cost and most environmentally-preferred forms of power generation. Hydroelectric
plants have high cash margins, storage capacity with the capability to produce power at all hours of the
day, and the ability to sell multiple products in the market including energy, capacity and ancillaries. Our
wind and solar facilities provide exposure to two of the fastest growing renewable power sectors, with
high cash margins, zero fuel input cost, and diverse and scalable applications including distributed
generation. Our storage facilities provide the markets in which they are located with critical services to the
grid and dispatchable generation. With our scale, diversity and the quality of our assets, we are
competitively positioned relative to other power generators, providing significant scarcity value to our
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, wind and solar assets that sell electricity under long-term, fixed
price contracts with creditworthy counterparties. Approximately 90% of our 2018 proportionate generation
output is contracted to public power authorities, load-serving utilities, industrial users or to affiliates of
Brookfield Asset Management. Our power purchase agreements have a weighted-average remaining
duration of 15 years, on a proportionate basis, providing long-term cash flow visibility.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 5
Strong financial profile and conservative financing strategy. Brookfield Renewable maintains
a robust balance sheet and access to global capital markets to ensure cash flow resiliency through the
cycle. Our debt to total capitalization is 39% and approximately 70% of our borrowings are non-recourse.
Corporate borrowings and subsidiary borrowings have weighted-average terms of approximately six and
ten years, respectively. Our available liquidity as at December 31, 2017 is approximately $1.5 billion of
cash and cash equivalents, available-for-sale securities and the available portions of credit facilities.
Well positioned for cash flow growth. We are focused on driving cash flow growth from existing
operations, fully funded by internally generated cash flow, including inflation escalations in our contracts,
margin expansion through revenue growth and cost reduction initiatives, and building out our
approximately 7,000 MW proprietary development pipeline at premium returns. While we do not rely on
acquisitions to achieve our growth targets, our business has upside from mergers and acquisitions on an
opportunistic basis. We employ a contrarian strategy, and look for capital scarcity to earn strong returns.
We take a disciplined approach to allocating capital into development and acquisitions with a focus on
downside protection and preservation of capital. Over the last ten years, we have invested in, acquired, or
commissioned 66 hydroelectric facilities totaling approximately 5,000 MW, 85 wind facilities totaling
approximately 3,600 MW, 537 solar facilities totaling approximately 1,500 MW, four biomass facilities
totaling 175 MW, two hydroelectric pumped storage and one battery storage totaling 2,098 MW and one
300 MW Co-gen plant. 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, 2017
Page 6
Management’s Discussion and Analysis
For the year ended December 31, 2017
This Management’s Discussion and Analysis for the year ended December 31, 2017 is provided as of
February 28, 2018. 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. 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 consolidated equity interests include the non-voting publicly traded limited
partnership units (“LP Units”) held by public unitholders and Brookfield, redeemable/exchangeable partnership units
held by Brookfield (“Redeemable/Exchangeable partnership units”), in Brookfield Renewable Energy L.P. (“BRELP”)
a holding subsidiary of Brookfield Renewable, and general partnership interest (“GP interest”) in BRELP held by
Brookfield. Holders of the GP interest, Redeemable/Exchangeable partnership units, and LP Units will be collectively
referred to throughout as “Unitholders”, “Units”, or as “per Unit”, unless the context indicates or requires otherwise.
The LP Units and Redeemable/Exchangeable partnership units have the same economic attributes in all respects.
See – “PART 9 - Presentation to Stakeholders and Performance Measurement”.
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 pounds 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 see “PART 4 – Financial Performance
Review on Proportionate Information – Segment Information” and for the non-IFRS financial measures we use to
explain our financial results, see “PART 9 - Presentation to Stakeholders and Performance Measurement –
Performance Measurement”. For a reconciliation of the non-IFRS financial measures to the most comparable IFRS
financial measures, see “PART 4 – Financial Performance Review on Proportionate Information – Reconciliation of
Non-IFRS Measures”. This Management’s Discussion and Analysis 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), on the SEC’s website (www.sec.gov/edgar.shtml),
or on SEDAR (www.sedar.com).
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 7
Organization of the Management’s Discussion and Analysis
PART 1 – 2017 Highlights
9 PART 6 - Selected Annual and Quarterly Information
PART 2 – Financial Performance Review on
Consolidated Information
PART 3 – Additional Consolidated Financial
Information
Property, plant and equipment
Related party transactions
Equity
PART 4 – Financial Performance Review on
Proportionate Information
Proportionate Results for the year
ended December 31, 2017 and 2016
Proportionate Results for the year
ended December 31, 2016 and 2015
Reconciliation of non-IFRS measures
Contract profile
PART 5 – 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
Historical operational and financial information
Summary of historical quarterly results
12 Proportionate Results for the Fourth Quarter
14
14 PART 7 - Business Risks and Risk Management
16 Risk management and financial instruments
Risk factors
18 PART 8 - Critical Estimates, Accounting Policies and
21
Internal Controls
28 PART 9 - Presentation to Stakeholders and
Performance Measurement
34
41
PART 10 - Cautionary Statements
51
52
53
55
58
72
78
81
43
47
49
50
50
50
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 8
PART 1 – 2017 HIGHLIGHTS
YEAR ENDED DECEMBER 31
(MILLIONS, EXCEPT AS NOTED)
Operational information
Capacity (MW)
Total generation (GWh)
Long-term average generation
Actual generation
Proportionate generation (GWh)
Long-term average generation
Actual generation
Average revenue ($ per MWh)
Selected financial information(1)
2017
2016
16,369
10,731
42,334
43,385
38,982
34,071
23,251
23,968
70
22,362
20,222
73
(65)
Net Loss attributable to Unitholders
(0.23)
Basic loss per LP Unit
Consolidated Adjusted EBITDA(2)
1,499
Proportionate Adjusted EBITDA(2)
942
Funds From Operations(2)
419
Adjusted Funds From Operations(2)
352
Funds From Operations per Unit(1)(2)
1.45
Distribution per LP Unit
1.78
(1) Holders of the GP interest, Redeemable/Exchangeable partnership units, and LP Units will be collectively referred to throughout
as “Unitholders”, “Units”, or as “per Unit”. The LP Units and Redeemable/Exchangeable partnership units have the same
the year ended December 31, 2017, weighted average LP Units,
economic attributes
Redeemable/Exchangeable partnership units and GP interest totaled 305.8 million (2016: 288.7 million).
(56)
(0.18)
1,751
1,142
581
513
1.90
1.87
respects. For
in all
(2) Non-IFRS measures. For reconciliations to the most directly comparable IFRS measure. See “PART 4 - Financial Performance
Review on Proportionate Information - Reconciliation of Non-IFRS Measures” and “PART 10 - Cautionary Statements”.
AS AT DECEMBER 31
(MILLIONS, EXCEPT AS NOTED)
Liquidity and Capital Resources
2017
2016
Available liquidity
Debt to capitalization(1)
Borrowings non-recourse to Brookfield Renewable(1)
Floating rate debt exposure(1)
Corporate borrowings
Average debt term to maturity
Average interest rate
Subsidiary borrowings on a proportionate basis(1)
9.5 years
Average debt term to maturity
Average interest rate
6.1%
(1) For 2017, adjusted to reflect the financing initiatives, associated with a hydroelectric and a storage facility, finalized subsequent
1,539 $
39%
70%
13%
1,191
38%
69%
18%
10.5 years
5.8%
6.4 years
4.5%
7.4 years
4.5%
$
to year-end.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 9
Operating Results
Net loss attributable to Unitholders of $56 million decreased from $65 million in the prior year as
the increase in Funds From Operations was partially offset by the impact of a significant deferred tax
expense as a result of the recently enacted U.S. Tax Cuts and Jobs Act enacted at the end of 2017 (“U.S.
tax reform”). The Basic loss per LP Unit of $0.18 per LP Unit decreased from a loss of $0.23 per LP Unit
in the prior year primarily due to the above mentioned decrease in Net loss attributable to Unitholders.
Funds From Operations increased 39% to $581 million supported by return to proportionate long-
term average generation, advancement of our organic initiatives and contributions from new investments
and acquisitions.
Funds From Operations per Unit of $1.90 increased 31% from the prior year.
Proportionate generation increased by 19% to 23,968 GWh over the prior year due primarily to
strong hydrological conditions in North America and Colombia. In the current year, we were ahead of
proportionate long-term average generation by 3% compared to 2016 where we were 10% below.
In 2017, we deployed approximately $625 million of equity in new transactions and development,
that provide approximately an additional 2.1 TWh of proportionate generation and $95 million of Funds
From Operations on a run-rate basis (contributed approximately 415 GWh and $18 million of generation
and Funds From Operations, respectively, in 2017):
• $232 million for TerraForm Global, a 952 MW portfolio of recently constructed and contracted
solar and wind assets, which includes 33 MW of assets in South Africa that are soon to be
acquired;
• $221 million for TerraForm Power which is a 2,600 MW diversified portfolio of solar and wind
assets located primarily in the United States;
• $73 million in a pumped storage facility in the U.K. with generating capacity of 2.1 GW, Brookfield
Renewable retains an approximate 7.5% interest; and
• $98 million in development.
Equity transactions
In 2017, distributions to LP Unitholders were $1.87 per LP Unit, which represents a 5% increase
over the prior year. Including a full year contribution from acquisitions and development projects, this
represents a 92% payout ratio.
•
•
During the year we completed the following:
Issued Preferred LP Units for gross proceeds of C$250 million ($190 million);
Issued LP Units at a price of C$42.15 per LP Unit. Concurrently, Brookfield purchased LP Units in
a private placement. The aggregate gross proceeds received were C$550 million ($422 million).
Subsequent to the year-end, we completed an additional Preferred LP Unit issuance for gross
proceeds of C$250 million ($201 million).
Liquidity and Capital Resources
Liquidity remains strong with $1.5 billion available at year-end.
Secured $3.1 billion of long-term debt at average rates of 4.5% reducing our floating rate
exposure to 13% and extending our average term to maturity to 10 years.
Growth and Development
We continue to advance the construction, on scope, schedule and budget, of 77 MW of
hydroelectric development projects in Brazil and 47 MW of wind projects in Ireland and Scotland. These
projects have annualized long-term average generation of 456 GWh and 154 GWh, respectively, with
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 10
commissioning dates expected between 2018 and 2020 and we expected to generate Funds From
Operations on a run-rate basis of $20 million.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 11
PART 2 – FINANCIAL PERFORMANCE REVIEW ON CONSOLIDATED INFORMATION
The following table reflects key financial data for the year ended December 31:
(MILLIONS, EXCEPT AS NOTED)
Revenues
Other income
Direct operating costs
Management service costs
Interest expense – borrowings
Depreciation
Current income tax expense
Deferred income tax (expense) recovery
Net (loss) income attributable to Unitholders
C$
€
R$
£
COP
$
$
2017
2,625 $
47
(978)
(82)
(632)
(782)
(39)
(49)
(56) $
2016
2,452 $
64
(1,038)
(62)
(606)
(781)
(44)
97
(65) $
Average FX rates to USD
1.30
0.89
3.19
0.78
2,951
1.33
0.90
3.49
0.74
3,045
2015
1,628
122
(552)
(48)
(429)
(616)
(18)
78
3
1.28
0.90
3.33
0.65
N/A
Current Year Variance Analysis (2017 vs 2016)
For the year ended December 31, 2017, we reported a net loss attributable to Unitholders of $56
million compared to a net loss attributable to Unitholders of $65 million for the year ended December 31,
2016.
Revenues totaling $2,625 million in the year ended December 31, 2017 represents an increase of
$173 million over the prior year, driven primarily by a return to long-term average generation, and the
contribution from our growth initiatives. Revenues increased $121 million as consolidated generation
increased by 27% or 9.3 TWh due primarily to strong hydrological conditions in North America and
Colombia. Our recent growth initiatives contributed 3.8 TWh in generation which amounted to $100
million in revenues. Partially offsetting those increases was a decrease in our average realized revenue
per MWh (from $72 per MWh to $61 per MWh) driving a $57 million decrease in revenue, as weaker
pricing in Colombia due to average above inflows was partially offset by strong pricing in Brazil caused by
the impact of low hydrology. The depreciation of the U.S. dollar versus most of the foreign currencies in
which we operate contributed an additional $57 million of revenues. This also affected operating and
borrowing costs. The above noted increase in revenues, was partially offset by the impact of the sale of
one of our Irish wind facilities in the first quarter of 2017 (contributed $28 million in revenues in the prior
year). The prior year included a $20 million settlement at our hydroelectric and Co-gen assets in Ontario
pertaining to the price escalator for power sold under power purchase agreements.
Other income decreased by $17 million primarily due to a $23 million gain realized on the
settlement of foreign currency hedging contracts in the prior year.
Direct operating costs totaling $978 million represent a decrease of $60 million. The decrease
was primarily attributable to the reduction in power purchases in Colombia and the successful recovery of
excess property taxes at one of our Canadian hydroelectric facilities that were paid in prior years. This
decrease was partially offset by growth in our portfolio.
Management service costs totaling $82 million represent an increase of $20 million, primarily
attributable to the growth in our capitalization due to a 16% increase in Brookfield Renewable’s unit price.
Interest expense totaling $632 million represents an increase of $26 million. The increase is
primarily attributable to the growth in our portfolio which contributed $22 million of additional interest
expense.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 12
Deferred income tax expense of $49 million represents a $146 million increase from the prior
year, due primarily to the U.S. tax reform.
Prior Year Variance Analysis (2016 vs 2015)
For the year ended December 31, 2016, we reported a net loss attributable to Unitholders of $65
million compared to a net income attributable to Unitholders of $3 million for the year ended December
31, 2015.
Revenues totaling $2,452 million represents 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 were partially offset by stronger generation for a net impact of $24 million. The appreciation
of the U.S. dollar in 2016, compared to 2015, resulted in a $27 million decrease in revenues. This also
affected operating and borrowing costs. The contribution to revenues from the growth in our portfolio was
$882 million. Revenues in 2016 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 of 2015 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.
Other income totaling $64 million represents a decrease of $58 million. The gain realized relating
to the wind facility sale mentioned above along with compensation from a concession agreement
impacted 2015. These were partially offset by increased interest income due to higher cash balances held
throughout 2016.
Direct operating costs, interest expense and depreciation expense increased over the prior year
primarily due 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.
Current income tax totaling $44 million represents an increase of $26 million, primarily relating to
the acquisition in Colombia.
Deferred income tax recovery totaling $97 million represents an increase of $19 million, primarily
attributable to lower income for tax purposes.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 13
PART 3 - ADDITIONAL CONSOLIDATED FINANCIAL INFORMATION
SUMMARY CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
The following table provides a summary of the key line items on the audited annual consolidated
statements of financial position as at December 31:
(MILLIONS)
Current assets
Property, plant and equipment, at fair value
Goodwill
Total assets
Long-term debt and credit facilities
Deferred income tax liabilities
Total liabilities
Total equity
Total liabilities and equity
$
$
2017
1,666
27,096
901
30,904
11,766
3,588
16,622
14,282
30,904
2016
907
25,257
896
27,737
10,182
3,802
15,065
12,672
27,737
Our balance sheet remains strong and reflects the stable nature of the business and the
integration of recent growth.
PROPERTY, PLANT AND EQUIPMENT
The fair value of property, plant and equipment totaled $27.1 billion as at December 31, 2017
compared to $25.2 billion as at December 31, 2016. During the year ended December 31, 2017,
acquisitions of TerraForm Global and Shantavny totaled $1,245 million. The development and
construction of power generating assets totaled $354 million. The 137 MW wind portfolio disposed in the
first quarter of this year had a fair value of $338 million. Fair value of the operating property, plant and
equipment increased by $854 million primarily recapturing depreciation on our hydro facilities and
offsetting impact from changes in power prices and discount rates. The depreciation of the U.S. dollar
increased property, plant and equipment by $506 million and was largely attributable to assets in Canada
and Europe as the Canadian dollar appreciated 6% and Euro appreciated 12% over the same period of
the previous year. We also recognized depreciation expense of $782 million which is significantly higher
than what we are required to reinvest in the business as sustaining capital expenditures.
See Note 12 – Property, plant and equipment, at fair value in our audited annual 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
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 14
In addition to these agreements, Brookfield Renewable and Brookfield have executed other
agreements that are described in Note 27 - Related Party Transactions in our audited annual
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 Americas Infrastructure Fund,
Brookfield Infrastructure Fund II, Brookfield Infrastructure Fund III and Brookfield Infrastructure Debt Fund
(“Private Funds”), in which they provide Brookfield Renewable with access to short-term financing using
the Private Funds’ credit facilities.
During the year, the committed unsecured revolving credit facility provided by Brookfield Asset
Management was increased to $400 million. Brookfield Asset Management had also placed funds on
deposit with Brookfield Renewable in the amount of $140 million during the first quarter of the current
year, which was repaid prior to the end of the first quarter. The interest expense on the draws from the
credit facility and the deposit totaled $1 million.
In 2011, on formation of Brookfield Renewable, Brookfield Asset Management transferred certain
development projects to Brookfield Renewable for no upfront consideration but is entitled to receive
variable consideration on commercial operation or sale of these projects. During the year, an amount of
$8 million has been paid relating to the commissioning of a 25 MW hydroelectric facility in Brazil.
The following table reflects the related party agreements and transactions in 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
2017
2016
2015
601 $
527 $
6
8
607 $
535 $
(13) $
(3) $
(24)
(19)
(56) $
(82) $
(23)
(20)
(46) $
(62) $
469
6
475
(5)
(22)
(30)
(57)
(48)
$
$
$
$
$
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 15
The following table reflects the impact of the related party agreements and transactions on the
consolidated balance sheets as at December 31:
Related party
2017
2016
(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
$
$
$
54 $
6
60 $
47
7
54
48 $
48
32
32
$
112 $
26
2
76
Accrued distributions payable on LP
Units and Redeemable/Exchangeable
partnership units
Amount due to
Brookfield
Equity-accounted investments and other
EQUITY
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 $30 million were declared during the year ended December 31, 2017 (2016: $19
million).
Preferred limited partners’ equity
On February 14, 2017, Brookfield Renewable issued 10,000,000 Class A, Series 11 Preferred
Limited Partnership Units (the “Series 11 Preferred 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%.
The holders of Series 11 Preferred Units will have the right, at their option, to reclassify their
Series 11 Preferred Units into Class A Preferred LP Units, Series 12 (the “Series 12 Preferred Units”),
subject to certain conditions on April 30, 2022 and on April 30 every five years thereafter. The holders of
Series 12 Preferred Units will be entitled to receive floating rate cumulative preferential cash distributions
equal to the sum of the 90-day Canadian Treasury Bill Rate plus 3.82%.
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, 2017, none of the Class A Preferred LP Units have been redeemed by
Brookfield Renewable.
In January 2018, Brookfield Renewable issued 10,000,000 Class A, Series 13 Preferred Limited
Partnership Units (the “Series 13 Preferred Units”) at a price of C$25 per unit for gross proceeds of
C$250 million ($201 million). The holders of the Series 13 Preferred Units are entitled to receive a
cumulative quarterly fixed distribution yielding 5.0% for the initial period ending April 30, 2023. 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 3.00%, and (ii) 5.00%.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 16
The holders of Series 13 Preferred Units will have the right, at their option, to reclassify their
Series 13 Preferred Units into Class A Preferred Limited Partnership Units, Series 14 (the “Series 14
Preferred Units”), subject to certain conditions, on April 30, 2023 and on April 30 every five years
thereafter. The holders of Series 14 Preferred Units will be entitled to receive floating rate cumulative
preferential cash distributions equal to the 90-day Canadian Treasury Bill Rate plus 3.00%.
Limited partners’ equity
On July 6, 2017, Brookfield Renewable completed the issuance of 8,304,000 non-voting LP Units
on a bought deal basis at a price of C$42.15 per LP Unit for gross proceeds of C$350 million ($271
million). Concurrently, Brookfield Asset Management purchased 4,943,000 LP Units at the offering price
(net of underwriting commission). The aggregate gross proceeds of the offering and the concurrent
private placement was C$550 million ($422 million). Brookfield Renewable incurred C$15 million ($11
million) in related transaction costs inclusive of fees paid to underwriters.
Brookfield Asset Management owns, directly and indirectly 185,727,567 LP Units and
Redeemable/Exchangeable partnership units, representing approximately 60% of Brookfield Renewable
on a fully-exchanged basis and the remaining approximate 40% is held by public investors.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 17
PART 4 – FINANCIAL PERFORMANCE REVIEW ON PROPORTIONATE INFORMATION
Actual and Long-term Average Generation
For assets acquired or reaching commercial operation during the year, 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. “Other” includes generation
from North America Co-gen and Brazil biomass.
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, wind and irradiance 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.
Generation from our North American pumped storage and Co-gen facilities is highly dependent
on market price conditions rather than the generating capacity of the facilities. Our European pumped
storage facility generates on a dispatchable basis when required by our contracts for ancillary services.
Generation from our biomass facilities is dependent on the amount of sugar cane harvested in a given
year. For these reasons, we do not consider a long-term average for these facilities.
Segment Information
Brookfield Renewable’s Chief Executive Officer and Chief Financial Officer (collectively, the chief
operating decision maker or “CODM”) review the results of the business, manage operations, and
allocate resources based on the type of technology.
With effect from the fourth quarter of 2017, operations are segmented by technology – 1)
hydroelectric, 2) wind, 3) solar, storage, and other (Co-gen and biomass), and 4) corporate – with
hydroelectric and wind further segmented by geography (North America, Colombia, Brazil, Europe and
Other). To reflect the way in which the CODM now reviews results, manage operations and allocate
resources, following the investments in First Hydro, TerraForm Power and TerraForm Global and as
Brookfield Renewable continues to build out its solar and storage businesses, the CODM has
commenced reviewing these businesses along with its Co-gen and biomass businesses on an aggregate
basis. The Colombia segment aggregates the financial results of its hydroelectric and Co-gen facilities. A
pumped storage facility in North America, that was previously included in the hydroelectric segment, is
now included in the “Solar, storage and other” segment. The corporate segment represents all activity
performed above the individual segments for the business.
We report our results in accordance with these segments and presents prior period segmented
information in a consistent manner. See Note 6 – Segmented information in our audited annual
consolidated financial statements.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 18
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. For the non-IFRS financial measures we use to explain our financial results, see “PART 9 -
Presentation to Stakeholders and Performance Measurement – Performance Measurement”. 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). See
“Reconciliation of Non-IFRS Measures”.
Proportionate Information
In addition, with the effect from the fourth quarter of 2017, reporting to the CODM on the
measures utilized to assess performance and allocate resources are on a proportionate basis.
Information on a proportionate basis reflects Brookfield Renewable’s share from facilities which it
accounts for using consolidation and the equity method whereby Brookfield Renewable either controls or
exercises significant influence or joint control over the investment, respectively. Proportionate information
provides a Unitholder perspective that the CODM considers important when performing internal analyses
and making strategic and operating decisions. The CODM also believes that providing proportionate
information helps investors understand the impacts of decisions made by management and financial
results allocable to Unitholders.
Proportionate financial information is not, and is not intended to be, presented in accordance with
IFRS. Tables reconciling IFRS data with data presented on a proportionate consolidation basis have been
disclosed. Segment revenues, other income, direct operating costs, interest expense, depreciation,
current and deferred income taxes, and other are items that will differ from results presented in
accordance with IFRS as these items (1) include Brookfield Renewable’s proportionate share of earnings
from equity-accounted investments attributable to each of the above-noted items, and (2) exclude the
proportionate share of earnings (loss) of consolidated investments not held by us apportioned to each of
the above-noted items.
The presentation of proportionate results has limitations as an analytical tool, including the
following:
• The amounts shown on the individual line items were derived by applying our overall economic
ownership interest percentage and do not necessarily represent our legal claim to the assets and
liabilities, or the revenues and expenses; and
• Other companies may calculate proportionate results differently than we do.
Because of these limitations, our proportionate financial information should not be considered in
isolation or as a substitute for our financial statements as reported under IFRS.
Segmented net income (loss) is not a measure the CODM uses to review the results of business
and allocate resources. Brookfield Renewable does not control those entities that have not been
consolidated and as such, have been presented as equity-accounted investments in its financial
statements. The presentation of the assets and liabilities and revenues and expenses do not represent
Brookfield Renewable’s legal claim to such items, and the removal of financial statement amounts that
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 19
are attributable to non-controlling interests does not extinguish Brookfield Renewable’s legal claims or
exposures to such items.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 20
PROPORTIONATE RESULTS FOR THE YEAR ENDED DECEMBER 31, 2017 AND 2016
The following chart reflects the generation and summary financial figures on a proportionate basis for the year ended December 31:
(GWh)
(MILLIONS)
Actual Generation LTA Generation
Revenues
Adjusted EBITDA
Funds From
Operations
Net Income (Loss)
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
13,942 11,960 13,059 12,977 $
945 $
819 $
665 $
548 $
486 $
367 $
174 $
128
3,426
3,078
3,874
3,761
3,683
2,419
3,488
2,994
243
191
187
192
21,051 17,457 20,421 19,732
1,379
1,198
178
99
942
130
88
766
North America
1,765
1,421
2,019
1,780
161
151
119
115
Europe
Brazil
490
278
571
266
513
245
605
245
46
26
56
17
26
22
32
13
2,533
2,258
2,777
2,630
233
224
167
160
105
Solar, Storage & Other
384
507
-
-
53
-
-
-
67
-
58
1
39
(6)
31
21
(15)
(231)
(208)
(253)
(233)
23,968 20,222 23,251 22,362 $ 1,679 $ 1,481 $ 1,142 $
942 $
581 $
419 $
(56)$
(65)
148
52
686
74
15
16
97
46
510
74
18
6
98
19
1
19
194
26
(20)
10
16
(13)
(26)
25
127
47
(8)
1
40
1
Hydroelectric
North America
Brazil
Colombia
Wind
Corporate
Total
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 21
HYDROELECTRIC OPERATIONS ON PROPORTIONATE BASIS
The following table presents our proportionate results for hydroelectric operations the year ended
December 31:
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA
Generation (GWh) – actual
Revenue
Other income
Direct operating costs
Adjusted EBITDA
Interest expense
Current income taxes
Funds From Operations
Depreciation
Deferred taxes and other
Net income
2017
20,421
21,051
1,379 $
15
(452)
942
(240)
(16)
686 $
(389)
(103)
194 $
2016
19,732
17,457
1,198
40
(472)
766
(237)
(19)
510
(400)
17
127
$
$
$
The following table presents our proportionate results by geography for hydroelectric operations
for the year ended December 31:
Actual
Generation (GWh)
Average
revenue
Per MWh
Adjusted
EBITDA
2016
2017
2016
2017
2016
Funds From
Operations
2016
2017
Net
Income
2017
2016
(MILLIONS, EXCEPT AS NOTED) 2017
North America
United States
Canada
Brazil
Colombia
Total
8,030
5,912
6,745 $
5,215
13,942 11,960
3,078
2,419
3,426
3,683
21,051 17,457 $
71 $
64
68
71
52
66 $
74 $ 360 $ 284 $ 248 $ 165 $
61
68
61
79
202
367
97
46
264
548
130
88
305
665
178
99
238
486
148
52
20 $
154
174
1
19
32
96
128
(26)
25
69 $ 942 $ 766 $ 686 $ 510 $ 194 $ 127
Funds From Operations increased 35% or $176 million from the prior year to $686 million
primarily due to improved hydrological conditions in North America and Colombia, strong pricing in the
Brazilian energy market and a full year contribution from our Colombian business.
Net income attributable to Unitholders increased by $67 million over the prior year as the increase
in Funds From Operations was partially offset by an increase in deferred tax expense primarily
attributable to the impact of the U.S. tax reform.
North America
Funds From Operations increased by $119 million over the prior year primarily due to a 2.0 TWh
(17%) increase in generation due to strong hydrology, specifically in Canada and New York where strong
inflows persisted throughout the year. Average revenue per MWh was in-line with the prior year as the
benefit of stronger market pricing was offset by the final step down in pricing at our Louisiana facility.
Net income attributable to Unitholders increased by $46 million over the prior year as the increase
in Funds From Operations was partially offset by an increase in deferred tax expense primarily due to the
aforementioned U.S. tax reform.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 22
Brazil
Funds From Operations increased by $51 million over the prior year primarily due to increased
revenues driven by an overall increase in generation. While hydrology in Brazil was lower than long-term
average, our business benefitted from a 11% increase in generation which was driven by the contribution
from a 25 MW development project commissioned in the first quarter as well as a 377 GWh outage that
impacted one of our facilities in the prior year. Average revenue per MWh increased 16% due to strong
market pricing.
Net income attributable to Unitholders increased by $27 million over the prior year due to the
above noted increase in Funds From Operations was partially offset by increased depreciation on our
growing asset base.
Colombia
Funds From Operations increased by $6 million over the prior year as 2017 benefited from a full
year of ownership.
Same store Funds From Operations was in-line with the prior year as the benefit of generation
that was 6% ahead of long-term average was offset by lower market prices.
Net income attributable to Unitholders decreased by $6 million over the prior year as deferred
income taxes were impacted by a tax rate reduction that occurred in 2016.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 23
WIND OPERATIONS ON PROPORTIONATE BASIS
The following table presents our proportionate results for wind operations for the year ended
December 31:
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA
Generation (GWh) – actual
Revenue
Direct operating costs
Adjusted EBITDA
Interest expense
Current income taxes
Funds From Operations
Depreciation
Deferred taxes and other
Net income
2017
2,777
2,533
233 $
(66)
167
(61)
(1)
105 $
(121)
32
16 $
2016
2,630
2,258
224
(64)
160
(62)
-
98
(122)
64
40
$
$
$
The following table presents our proportionate results by geography for wind operations for the year
ended December 31:
Actual
Generation (GWh)
Average
revenue
per MWh
Adjusted
EBITDA
2016
2017
2016
2017
2016
Funds From
Operations
2016
2017
Net
Income
2017
2016
(MILLIONS, EXCEPT AS NOTED) 2017
North America
United States
Canada
Europe
Brazil
Total
658
1,107
1,765
490
278
2,533
452 $
969
1,421
571
266
2,258 $
91 $ 119 $
91
91
94
94
92 $
100
106
98
64
99 $ 167 $ 160 $ 105 $
35 $
80
115
32
13
37 $
82
119
26
22
17 $
57
74
15
16
21 $
53
74
18
6
98 $
14 $
12
26
(20)
10
16 $
(7)
54
47
(8)
1
40
Funds From Operations increased 7% or $7 million from the prior year to $105 million due to
improved generation in North America and pricing at our Brazilian wind portfolio partially offset by the
impact of the sale of a 137 MW wind portfolio in Ireland during 2017.
Net income attributable to Unitholders decreased by $24 million over the prior year as the
increase in Funds From Operations was offset by unrealized hedging losses from our ongoing foreign
currency hedging program in Europe.
North America
Funds From Operations were consistent with the prior year as a 24% increase in generation due
to stronger wind resources in Canada and contributions from our investment in TerraForm Power was
offset by a 14% decrease in average revenue per MWh. The average revenue per MWh decreased as
the prior year included a $6 million settlement for lost revenue due to wake effect at one our facilities in
the United States.
Net income attributable to Unitholders decreased by $21 million over the prior year due primarily
to depreciation expense relating to the investment in TerraForm Power.
Europe
Adjusting for the 137 MW wind portfolio sold during the first quarter of 2017, Funds From
Operations increased by $4 million over the prior year to $15 million as a result of the acquisition and
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 24
development of 50 MW of additional capacity during the year. Generation of existing assets was slightly
below prior year due to lower wind resources.
Generation and Funds From Operations were impacted by 106 GWh and $7 million, respectively,
as a result of the aforementioned asset sale.
Net loss attributable to Unitholders decreased by $12 million over the prior year to $20 million as
a result of unrealized hedging losses from our ongoing foreign currency hedging program.
Brazil
Funds From Operations at our Brazilian business was $16 million versus $6 million in the prior
year. This increase was driven by a 5% increase in generation due to above average wind resource and a
47% increase in the average revenue per MWh due to strong market pricing.
Net income attributable to Unitholders increased by $9 million over the prior year primarily due to
the above noted increase in Funds From Operations.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 25
SOLAR, STORAGE AND OTHER OPERATIONS ON PROPORTIONATE BASIS
The following table presents our proportionate results for solar, storage and other operations for
the year ended December 31:
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA
Generation (GWh) – actual
Revenue
Other income
Direct operating costs
Adjusted EBITDA
Interest expense
Current income taxes
Funds From Operations
Depreciation
Deferred taxes and other
Net (loss) income
2017
53
384
67 $
6
(34)
39
(17)
(1)
21 $
(29)
(5)
(13) $
2016
-
507
58
(1)
(26)
31
(12)
-
19
(18)
-
1
$
$
$
Funds From Operations at our pumped storage business increased $14 million over the prior year
to $17 million due to the addition of our First Hydro facility and improved performance at our facility in
New England.
Our solar business is operating in line with expectations after the acquisition completed during the
fourth quarter of TerraForm Power.
In 2016, our Ontario Co-gen asset benefitted from a settlement pertaining to the price escalator
for power sold under power purchases agreements contributing $18 million to Funds From Operations.
Net loss attributable to Unitholders decreased by $14 million over the prior year as the increase in
Funds From Operations was offset by additional depreciation on our growing portfolios and deferred tax
expenses attributable to the U.S. tax reform.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 26
CORPORATE
The following table presents our results for corporate for the year ended December 31:
(MILLIONS, EXCEPT AS NOTED)
Revenue
Other income
Direct operating costs
Adjusted EBITDA
Management service costs
Interest expense
Distributions on Preferred LP Units and Shares
Funds From Operations
Deferred taxes and other
Net (loss)
$
$
$
2017
- $
19
(25)
(6)
(82)
(89)
(54)
(231) $
(22)
(253) $
2016
1
8
(24)
(15)
(62)
(91)
(40)
(208)
(25)
(233)
Realized gains on our toehold positions in the TerraForm companies contributed $15 million to
Other income.
Management fees increased primarily due to a higher LP Unit price compared to the prior year.
Distributions on Preferred LP Units and Preferred Shares increased $14 million compared to the
prior year as a result of the C$250 million ($190 million) Preferred LP Units issuance completed in the first
quarter of 2017.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 27
PROPORTIONATE RESULTS FOR THE YEAR ENDED DECEMBER 31, 2016 AND 2015
The following chart reflects the generation and summary financial figures on a proportionate basis for the year ended December 31:
(GWh)
(MILLIONS)
Actual Generation LTA Generation
Revenues
Adjusted EBITDA
Funds From
Operations
Net (Loss) Income
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Hydroelectric
North America
11,960 11,532 12,977 12,749 $
819 $
819 $
548 $
557 $
367 $
373 $
128 $
206
Brazil
3,078
3,158
3,761
3,447
Colombia
2,419
-
2,994
-
187
192
203
-
17,457 14,690 19,732 16,196
1,198
1,022
130
88
766
164
-
721
Wind
North America
1,421
1,437
1,780
1,778
151
150
115
124
Europe
Brazil
571
266
615
186
605
245
591
184
2,258
2,238
2,630
2,553
Storage & Other
507
734
-
-
-
-
-
-
56
17
224
58
1
56
9
215
59
-
32
13
160
31
(15)
44
8
176
28
97
136
46
510
74
18
6
98
19
-
509
76
32
5
113
23
(26)
25
127
47
(8)
1
40
1
20
-
226
(19)
1
1
(17)
6
(18)
(208)
(178)
(233)
(212)
20,222 17,662 22,362 18,749 $ 1,481 $ 1,296 $
942 $
907 $
419 $
467 $
(65)$
3
Corporate
Total
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 28
HYDROELECTRIC OPERATIONS ON PROPORTIONATE BASIS
The following table presents our proportionate results for hydroelectric operations the year ended
December 31:
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA
Generation (GWh) – actual
Revenue
Other income
Direct operating costs
Adjusted EBITDA
Interest expense
Current income taxes
Funds From Operations
Depreciation
Deferred taxes and other
Net income
2016
19,732
17,457
1,198 $
40
(472)
766
(237)
(19)
510 $
(400)
17
127 $
2015
16,196
14,690
1,022
51
(352)
721
(197)
(15)
509
(331)
48
226
$
$
$
The following table presents our proportionate results by geography for hydroelectric operations
for the year ended December 31:
Actual
Generation (GWh)
Average
revenue
Per MWh
Adjusted
EBITDA
(MILLIONS, EXCEPT AS NOTED) 2016
2015
2016
2015
2016
2015
North America
Funds From
Operations
2015
2016
Net
Income
2016
2015
United States
6,745
6,839 $
74 $
75 $ 284 $ 305 $ 165 $ 183 $
32 $
94
Canada
Brazil
Colombia
Total
5,215
4,693
11,960 11,532
3,078
3,158
2,419
-
61
68
61
79
66
71
64
-
264
548
130
88
252
557
164
-
202
367
97
46
190
373
136
-
96
128
(26)
25
112
206
20
-
17,457 14,690 $
69 $
70 $ 766 $ 721 $ 510 $ 509 $ 127 $ 226
Funds From Operations increased $1 million from the prior year to $510 million as the acquisition
of our Colombian business and higher generation at our North American business was offset by lower
realized pricing in North America and Brazil and the benefit of settlements received by our Brazilian
business in 2015.
Net Income attributable to Unitholders decreased by $99 million over the prior year due primarily
to depreciation expense on our growing asset base.
North America
Funds From Operations decreased by $6 million as a 4% increase in generation due to the
benefit of acquisitions and improved hydrology at our existing facilities, was more than offset by a $3
decrease in average revenue per MWh. Our portfolio in Pennsylvania, which was acquired in 2016,
contributed 150 GWh on a proportionate basis and $4 million in Funds From Operations.
Net income attributable to Unitholders decreased by $78 million due to higher depreciation
expense on our growing asset base.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 29
Brazil
Funds From Operations decreased by $39 million from the prior year. Growth in our portfolio
contributed 343 GWh and $11 million in Funds From Operation. An unplanned 377 GWh outage at one
of our facilities and a 5% decrease in average revenue per MWh collectively and negatively impacted
Funds From Operations by $23 million. In 2015, we benefited from a financial settlement relating to the
delayed completion of a hydroelectric facility and received compensation in exchange for electing not to
renew expired concession agreements at two facilities, collectively contributed $27 million.
Net loss attributable to Unitholders decreased by $46 million due primarily to the above noted
decrease in Funds From Operations.
Colombia
The addition of the hydroelectric portfolio in the first quarter of 2016 contributed Funds From
Operations and Net income attributable to Unitholders by $46 million and $25 million, respectively.
Overall the portfolio performed in-line with expectations.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 30
WIND OPERATIONS ON PROPORTIONATE BASIS
The following table presents our proportionate results for wind operations for the year ended
December 31:
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA
Generation (GWh) – actual
Revenue
Other income
Direct operating costs
Adjusted EBITDA
Interest expense
Funds From Operations
Depreciation
Deferred taxes and other
Net income (loss)
2016
2,630
2,258
224 $
-
(64)
160
(62)
98 $
(122)
64
40 $
2015
2,258
2,238
215
20
(59)
176
(63)
113
(119)
(11)
(17)
$
$
$
The following table presents our proportionate results by geography for wind operations for the year
ended December 31:
Actual
Generation (GWh)
Average
revenue
per MWh
Adjusted
EBITDA
2015
2016
2015
2016
2015
Funds From
Operations
2015
2016
Net
Income
2016
2015
(MILLIONS, EXCEPT AS NOTED) 2016
North America
United States
Canada
Europe
Brazil
Total
452
969
1,421
571
266
2,258
421 $ 119 $ 107 $
100
106
98
64
99 $
35 $
80
103
115
104
32
91
48
13
96 $ 160 $ 176 $
40 $
84
124
44
8
1,016
1,437
615
186
2,238 $
21 $
53
74
18
6
20 $
56
76
32
5
98 $ 113 $
(7)$
54
47
(8)
1
40 $
(19)
-
(19)
1
1
(17)
Funds From Operations decreased 13% or $15 million from the prior year to $98 million. While
generation and average revenue per MWh were up from the prior year this was more than offset by a $12
million gain on the sale of our California wind facility and $8 million of hedging gains realized from our
ongoing foreign currency program in Europe, both of which benefitted 2015.
Net income attributable to Unitholders increased by $57 million over the prior year due primarily
to the benefit of a deferred tax recovery at our North American business.
North America
Adjusted for the sale of our 102 MW Californian wind facility which was sold in the third quarter of
2015, Funds From Operations increased by $11 million. The increase is due primarily to higher
generation and lower interest costs due to the amortization of project-level debt. Additionally, 2016
benefitted from a $6 million settlement for lost revenue due to the wake effect at one of our facilities in the
U.S.
As a result of the asset sale, generation and Funds From Operations declined by 27 GWh and $1
million, respectively. 2015 also benefitted from a $12 million gain from the sale.
Net income attributable to Unitholders increased by $66 million over the prior year due primarily
to the benefit of a deferred tax recovery.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 31
Europe
Funds From Operations decreased by $14 million over the prior year to $18 million. Generation
was 7% below prior year due to weaker wind resource and a planned outage at one of our facilities.
Additionally, in 2015, we benefited from a $8 million hedging gain relating to our ongoing foreign currency
program.
Net loss attributable to Unitholders decreased by $9 million over the prior year due primarily to
the above noted decrease in Funds From Operations.
Brazil
Funds From Operations was $1 million ahead of the prior year. Generation in Brazil was above
the long-term average and the prior year due to improved wind conditions and contribution from a full year
of generation from the facilities acquired.
Net income attributable to Unitholders was consistent year over year at $1 million.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 32
STORAGE AND OTHER OPERATIONS ON PROPORTIONATE BASIS
The following table presents our proportionate results for storage and other operations for the
year ended December 31:
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – actual
Revenue
Other income
Direct operating costs
Adjusted EBITDA
Interest expense
Funds From Operations
Depreciation
Deferred taxes and other
Net income
2016
507
58 $
(1)
(26)
31
(12)
19 $
(18)
-
1 $
2015
734
59
-
(31)
28
(5)
23
(12)
(5)
6
$
$
$
Funds From Operations at our pumped storage business decreased by $13 million from the prior
year due to weak market conditions.
Funds From Operations from our North American Co-gen and Brazilian biomass facilities
increased by $10 million from the prior year. Generation decreased due to limited availability of our Co-
gen facilities as a result of weak natural gas prices resulting in a $8 million decrease in Funds From
Operations. This was more than offset by an $18 million settlement at our Ontario Co-gen asset
pertaining to the price escalator for power sold under power purchase agreements.
Net income attributable to Unitholders decreased by $5 million due to the above noted decrease
in Funds From Operations.
CORPORATE
The following table presents our results for corporate for the year ended December 31:
(MILLIONS, EXCEPT AS NOTED)
Revenue
Other income
Direct operating costs
Adjusted EBITDA
Management service costs
Interest expense
Distributions on preferred LP Units and preferred shares
Funds From Operations
Deferred taxes and other
Net (loss)
$
$
$
2016
1 $
8
(24)
(15)
(62)
(91)
(40)
(208) $
(25)
(233) $
2015
-
5
(23)
(18)
(48)
(81)
(31)
(178)
(34)
(212)
Management fees increased due primarily to a higher LP Unit price compared to the prior year.
Interest expense increased following the C$500 million ($383 million) medium-term notes issued
in third quarter of 2016.
Distributions on Preferred LP Units and Preferred Shares increased $9 million compared to the
prior year as a result of the C$200 million ($152 million) Preferred LP Unit issuance completed in the
second quarter of 2016.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 33
RECONCILIATION OF NON-IFRS MEASURES
The following table reflects Adjusted EBITDA, Funds From Operations, Adjusted Funds From Operations and provides a reconciliation to
net income (loss) for the year ended December 31, 2017:
Contribution
Hydroelectric
Attributable to Unitholders
Wind
Solar, Corporate
Total
from Attributable
equity
accounted
investments
(74)
(11)
28
to non-
controlling
As per
IFRS
interests financials(1)
2,625
47
(978)
1,020
18
(429)
($ MILLIONS)
Revenues
Other income
Direct operating costs
Share of Adjusted EBITDA from
equity accounted investments
Adjusted EBITDA
Management service costs
Interest expense - borrowings
Current income taxes
Distributions attributable to
Preferred limited partners equity
Preferred equity
Share of interest and cash taxes from
equity accounted investments
Share of Funds From Operations
attributable to non-controlling interests
Funds From Operations
Adjusted sustaining capital expenditures(2)
Adjusted Funds From Operations
Adjusted sustaining capital expenditures(2)
Depreciation
Unrealized financial instrument loss
Deferred income tax expense
Other
Share of earnings from
equity accounted investments
Net income attributable to
non-controlling interests
Net income (loss) attributable to Unitholders(3)
North
America
945
1
(281)
Colombia Brazil
243
12
(77)
191
2
(94)
North
America Europe
46
-
(20)
161
-
(42)
Storage
and
Other
67
6
(34)
Brazil
26
-
(4)
-
665
-
(180)
1
-
-
-
-
486
-
486
-
(222)
(3)
(67)
(20)
-
-
174
-
99
-
(42)
(5)
-
178
-
(18)
(12)
-
119
-
(45)
-
-
26
-
(10)
(1)
-
-
-
-
52
-
52
-
(26)
(3)
(10)
6
-
-
19
-
-
-
-
148
-
148
-
(141)
-
2
(8)
-
-
1
-
-
-
-
74
-
74
-
(89)
(1)
45
(3)
-
-
26
-
-
-
-
15
-
15
-
(24)
(12)
6
(5)
-
-
(20)
-
22
-
(6)
-
-
-
-
-
16
-
16
-
(8)
-
-
2
-
-
10
-
39
-
(17)
(1)
-
-
-
-
21
-
21
-
(29)
-
1
(6)
-
-
(13)
-
19
(25)
-
(6)
(82)
(89)
-
(28)
(26)
1,679
40
(577)
-
1,142
(82)
(407)
(18)
(28)
(26)
57
-
-
21
1
-
-
-
-
(22)
-
(231)
-
(231)
-
-
(10)
(3)
(9)
-
581
(68)
513
68
(539)
(29)
(26)
(43)
-
-
-
-
-
22
1
(3)
13
-
-
(33)
-
(253)
-
(56)
-
-
-
609
-
(246)
(22)
-
-
-
(341)
-
-
-
-
(265)
(5)
(20)
2
-
288
-
57
(82)
(632)
(39)
(28)
(26)
(22)
(341)
(782)
(33)
(49)
(28)
(33)
288
(56)
(1) Share of earnings from equity-accounted investments of $2 million is comprised of amounts found on the share of Adjusted EBITDA, share of interest and cash taxes and
share of earnings lines. Net income attributable to participating non-controlling interests – in operating subsidiaries of $53 million is comprised of amounts found on Share of
Funds From Operations attributable to non-controlling interests and Net Income attributable to non-controlling interests.
(2) Based on long-term sustaining capital expenditure plans.
(3) Net income (loss) attributable to Unitholders includes net income (loss) attributable to GP interest, Redeemable/Exchangeable partnership units and LP Units. Total net
income (loss) includes amounts attributable to Unitholders, non-controlling interests, preferred limited partners equity and preferred equity.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 34
The following table reflects Adjusted EBITDA, Funds From Operations, Adjusted Funds From Operations and provides a reconciliation to
net income (loss) for the year ended December 31, 2016:
Contribution
Storage Corporate
Total
from Attributable
equity
accounted
investments
(37)
-
16
to non-
controlling
As per
IFRS
interests financials(1)
2,452
64
(1,038)
1,008
17
(468)
Hydroelectric
North
America
819
24
(295)
Colombia
192
3
(107)
-
548
-
(177)
(4)
-
-
-
-
367
-
367
-
(244)
1
31
(27)
-
88
-
(36)
(6)
-
-
-
-
46
-
46
-
(31)
-
6
4
Brazil
187
13
(70)
-
130
-
(24)
(9)
-
-
-
-
97
-
97
-
(125)
-
7
(5)
Attributable to Unitholders
Wind
North
America Europe
56
-
(24)
151
-
(36)
Brazil
17
-
(4)
-
115
-
(41)
-
-
-
-
-
74
-
74
-
(80)
-
49
4
-
32
-
(14)
-
-
-
-
-
18
-
18
-
(38)
-
6
6
-
13
-
(7)
-
-
-
-
-
6
-
6
-
(4)
-
-
(1)
and
Other
58
(1)
(26)
-
31
-
(12)
-
-
-
-
-
19
-
19
-
(18)
2
-
(2)
1
8
(24)
-
(15)
(62)
(91)
-
(15)
(25)
1,481
47
(586)
-
942
(62)
(402)
(19)
(15)
(25)
-
(208)
-
(208)
-
-
(6)
(21)
2
-
419
(67)
352
67
(540)
(3)
78
(19)
-
-
-
-
-
-
-
-
-
-
-
(12)
21
-
-
12
-
-
-
-
-
-
-
-
11
(2)
-
-
(9)
-
557
-
(216)
(25)
-
-
-
(316)
-
-
-
-
(252)
1
19
(19)
21
(62)
(606)
(44)
(15)
(25)
(12)
(316)
(781)
(4)
97
(38)
-
(9)
($ MILLIONS)
Revenues
Other income
Direct operating costs
Share of Adjusted EBITDA from
equity accounted investments
Adjusted EBITDA
Management service costs
Interest expense - borrowings
Current income taxes
Distributions attributable to
Preferred limited partners equity
Preferred equity
Share of interest and cash taxes from
equity accounted investments
Share of Funds From Operations
attributable to non-controlling interests
Funds From Operations
Adjusted sustaining capital expenditures(2)
Adjusted Funds From Operations
Adjusted sustaining capital expenditures(2)
Depreciation
Unrealized financial instrument loss
Deferred income tax expense
Other
Share of earnings from
equity accounted investments
Net income attributable to
non-controlling interests
Net income (loss) attributable to Unitholders(3)
251
(65)
(1) Share of earnings from equity-accounted investments of $nil is comprised of amounts found on the share of Adjusted EBITDA, share of interest and cash taxes and share of
-
(233)
-
(26)
-
128
251
-
-
(65)
-
47
-
25
-
(8)
-
-
-
1
-
1
earnings lines. Net income attributable to participating non-controlling interests – in operating subsidiaries of $65 million is comprised of amounts found on Share of Funds
From Operations attributable to non-controlling interests and Net Income attributable to non-controlling interests.
(2) Based on long-term sustaining capital expenditure plans.
(3) Net income (loss) attributable to Unitholders includes net income (loss) attributable to GP interest, Redeemable/Exchangeable partnership units and LP Units. Total net
income (loss) includes amounts attributable to Unitholders, non-controlling interests, preferred limited partners equity and preferred equity.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 35
The following table reflects Adjusted EBITDA, Funds From Operations, Adjusted Funds From Operations and provides a reconciliation to
net income (loss) for the year ended December 31, 2015:
Contribution
Hydroelectric
North
America
819
23
(285)
Colombia
-
-
-
-
557
-
(179)
(5)
-
-
-
-
373
373
-
(218)
1
36
14
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Attributable to Unitholders
Wind
Storage Corporate
Total
Brazil
203
28
(67)
-
164
-
(18)
(10)
-
-
-
-
136
136
-
(113)
-
4
(8)
North
America Europe
56
8
(20)
150
12
(38)
Brazil
9
-
(1)
and
Other
59
-
(31)
-
124
-
(48)
-
-
-
-
-
76
76
-
(83)
2
16
(30)
-
44
-
(12)
-
-
-
-
-
32
32
-
(32)
-
2
(1)
-
8
-
(3)
-
-
-
-
-
5
5
-
(4)
-
-
-
-
28
-
(5)
-
-
-
-
-
23
23
-
(12)
(1)
-
(4)
-
5
(23)
-
(18)
(48)
(81)
-
(1)
(30)
1,296
76
(465)
-
907
(48)
(346)
(15)
(1)
(30)
-
-
-
(178)
(178)
-
-
(15)
20
(39)
-
467
(60)
407
60
(462)
(13)
78
(67)
from Attributable
equity
accounted
investments
(44)
-
18
to non-
controlling
As per
IFRS
interests financials(1)
1,628
122
(552)
376
46
(105)
26
-
-
6
-
-
-
(6)
-
-
-
-
9
1
-
-
317
-
(89)
(3)
-
-
-
(225)
-
-
-
(161)
3
2
-
26
(48)
(429)
(18)
(1)
(30)
(6)
(225)
(614)
(9)
80
(67)
-
-
-
-
-
-
-
(10)
-
(10)
($ MILLIONS)
Revenues
Other income
Direct operating costs
Share of Adjusted EBITDA from
equity accounted investments
Adjusted EBITDA
Management service costs
Interest expense - borrowings
Current income taxes
Distributions attributable to
Preferred limited partners equity
Preferred equity
Share of interest and cash taxes from
equity accounted investments
Share of Funds From Operations
attributable to non-controlling interests
Funds From Operations
Adjusted sustaining capital expenditures(2)
Adjusted Funds From Operations
Adjusted sustaining capital expenditures(2)
Depreciation
Unrealized financial instrument loss
Deferred income tax expense (recovery)
Other
Share of earnings from
equity accounted investments
Net income attributable to
non-controlling interests
Net income (loss) attributable to Unitholders(3)
156
3
(1) Share of earnings from equity-accounted investments of $10 million is comprised of amounts found on the share of Adjusted EBITDA, share of interest and cash taxes and
share of earnings lines. Net income attributable to participating non-controlling interests – in operating subsidiaries of $69 million is comprised of amounts found on Share of
Funds From Operations attributable to non-controlling interests and Net Income attributable to non-controlling interests.
-
(212)
-
206
156
-
-
(19)
-
20
-
1
-
1
-
6
-
3
-
-
-
(2) Based on long-term sustaining capital expenditure plans.
(3) Net income (loss) attributable to Unitholders includes net income (loss) attributable to GP interest, Redeemable/Exchangeable partnership units and LP Units. Total net
income (loss) includes amounts attributable to Unitholders, non-controlling interests, preferred limited partners equity and preferred equity.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 36
The following table reflects Adjusted EBITDA, Funds From Operations and provides reconciliation to net income (loss) for the three
months ended December 31, 2017:
Contribution
Hydroelectric
Attributable to Unitholders
Wind
Solar, Corporate
Total
($ MILLIONS)
Revenues
Other income
Direct operating costs
Share of Adjusted EBITDA from
equity accounted investments
Adjusted EBITDA
Management service costs
Interest expense - borrowings
Current income taxes
Distributions attributable to
Preferred limited partners equity
Preferred equity
Share of interest and cash taxes from
equity accounted investments
Share of Funds From Operations
attributable to non-controlling interests
Funds From Operations
Depreciation
Unrealized financial instrument gain
Deferred income tax expense
Other
Share of earnings from
equity accounted investments
Net income attributable to
non-controlling interests
Net income (loss) attributable to Unitholders
North
America
217
-
(73)
Colombia
51
-
(25)
Brazil
64
2
(23)
North
America Europe
12
-
(5)
53
-
(16)
Storage
and
Other
26
6
(10)
Brazil
7
-
(1)
-
144
-
(44)
-
-
-
-
-
100
(57)
(2)
(62)
(7)
-
-
(28)
-
26
-
(10)
(2)
-
-
-
-
14
(2)
-
(1)
(4)
-
-
7
-
43
-
(6)
(4)
-
-
-
-
33
(36)
-
(1)
(2)
-
-
(6)
-
37
-
(15)
-
-
-
-
-
22
(28)
-
32
(4)
-
-
22
-
7
-
(1)
-
-
-
-
-
6
(8)
5
1
(13)
-
-
(9)
-
6
-
(1)
-
-
-
-
-
5
(2)
-
-
-
-
-
3
-
22
-
(8)
-
-
-
-
-
14
(10)
(1)
1
(10)
-
-
(6)
from Attributable
equity
accounted
investments
(39)
(10)
13
to non-
controlling
interests
266
6
(114)
36
-
-
12
-
-
-
(12)
-
-
13
1
(3)
14
-
158
-
(59)
(6)
-
-
-
(93)
-
(52)
3
3
(23)
Total
657
22
(262)
36
(24)
(155)
(12)
(7)
(7)
(12)
(93)
(182)
7
(32)
(47)
-
18
(8)
-
10
(24)
(23)
-
(7)
(7)
-
-
(51)
-
1
(2)
2
430
26
(161)
-
295
(24)
(108)
(6)
(7)
(7)
-
-
143
(143)
3
(32)
(38)
-
-
(25)
-
(25)
-
(50)
-
(67)
-
-
69
-
69
(67)
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 37
The following table reflects Adjusted EBITDA, Funds From Operations and provides reconciliation to net income (loss) for the three
months ended December 31, 2016:
Contribution
Hydroelectric
Attributable to Unitholders
Wind
Storage Corporate
Total
($ MILLIONS)
Revenues
Other income
Direct operating costs
Share of Adjusted EBITDA from
equity accounted investments
Adjusted EBITDA
Management service costs
Interest expense - borrowings
Current income taxes
Distributions attributable to
Preferred limited partners equity
Preferred equity
Share of interest and cash taxes from
equity accounted investments
Share of Funds From Operations
attributable to non-controlling interests
Funds From Operations
Depreciation
Unrealized financial instrument gain
Deferred income tax recovery
Other
Share of earnings from
equity accounted investments
Net income attributable to
non-controlling interests
Net income (loss) attributable to Unitholders
North
America
162
-
(71)
Colombia
56
-
(28)
Brazil
46
3
(16)
North
America Europe
15
-
(7)
38
-
(9)
Brazil
5
-
(1)
and
Other
10
-
(8)
-
91
-
(44)
-
-
-
-
-
47
(63)
1
13
(19)
-
-
(21)
-
28
-
(10)
(5)
-
-
-
-
13
(9)
-
12
(1)
-
-
15
-
33
-
(5)
(2)
-
-
-
-
26
(33)
-
4
(1)
-
-
(4)
-
29
-
(10)
-
-
-
-
-
19
(20)
-
49
(3)
-
-
45
-
8
-
(5)
-
-
-
-
-
3
(13)
-
1
8
-
-
(1)
-
4
-
(2)
-
-
-
-
-
2
(1)
-
-
-
-
-
1
-
2
-
(3)
-
-
-
-
-
(1)
(5)
1
-
(4)
-
-
(9)
1
1
(8)
-
(6)
(16)
(23)
-
(4)
(6)
-
-
(55)
-
2
(28)
8
333
4
(148)
-
189
(16)
(102)
(7)
(4)
(6)
-
-
54
(144)
4
51
(12)
-
-
-
(73)
-
(47)
from Attributable
equity
accounted
investments
(9)
-
5
to non-
controlling
interests
247
5
(115)
4
-
-
3
-
-
-
(3)
-
-
3
(1)
-
-
(2)
-
-
-
137
-
(60)
(17)
-
-
-
(60)
-
(47)
(1)
44
(20)
-
24
-
Total
571
9
(258)
4
(16)
(159)
(24)
(4)
(6)
(3)
(60)
(188)
2
95
(32)
(2)
24
(47)
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 38
The following table reconciles net loss attributable to Limited partners’ equity and loss per LP Unit, the most directly comparable IFRS
measures, to Funds From Operations, Funds From Operations per Unit and Adjusted EBITDA, all non-IFRS financial metrics for the year ended
December 31:
$
$
$
$
(MILLIONS, EXCEPT AS NOTED)
Net loss attributable to:
Limited partners' equity
General partnership interest in a holding
subsidiary held by Brookfield
Participating non-controlling interests - in a holding
subsidiary - Redeemable/Exchangeable units
held by Brookfield
Net loss attributable to Unitholders
Depreciation
Unrealized financial instruments loss
Deferred income tax expense (recovery)
Other
Funds From Operations
Adjusted sustaining capital expenditures
Adjusted Funds From Operations
Adjusted sustaining capital expenditures
Distributions attributable to:
Preferred limited partners equity
Preferred equity
Current income taxes
Interest expense - borrowings
Management service costs
Proportionate Adjusted EBITDA
Attributable to non-controlling interests
2017
2016
2015
2014
2013
2017
2016
2015
2014
2013
Per unit
(32) $
(36) $
2 $
58 $
69 $
(0.18) $
(0.23) $
0.01 $
0.22 $
0.27
-
-
-
-
(0.18) $
1.76
(0.23) $
1.87
0.09
0.09
0.01
(0.27)
0.14
1.90 $
0.07
1.45 $
- $
- $
-
-
0.01 $
1.68
0.05
(0.28)
0.23
1.69 $
0.20
0.42 $
1.68
0.01
(0.11)
0.07
2.07 $
0.25
0.52
1.81
(0.11)
(0.07)
0.09
2.24
(1) $
- $
- $
1 $
1
(23)
(56) $
539
29
26
43
581 $
(68)
513
68
28
26
18
407
82
1,142
609
(29)
(65) $
540
3
(78)
19
419 $
(67)
352
67
15
25
19
402
62
942
557
1
3 $
462
13
(78)
67
467 $
(60)
407
60
1
30
15
346
48
907
317
55
114 $
456
2
(29)
17
560 $
(58)
502
58
-
38
6
353
51
67
137 $
481
(30)
(18)
24
594 $
(56)
538
56
-
37
17
366
41
1,008
1,055
211
156
1,751
1,499
1,224
1,219
1,211
305.77 288.69 275.64 271.08
265.25
Consolidated Adjusted EBITDA
Weighted average Units outstanding(1)
(1)
Includes GP interest, Redeemable/Exchangeable partnership units, and LP Units.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 39
The following table reconciles net loss attributable to Limited partners’ equity and loss per LP
Unit, the most directly comparable IFRS measures, to Funds From Operations, and Funds From
Operations per Unit, both non-IFRS financial metrics for the three months ended December 31:
(MILLIONS, EXCEPT AS NOTED)
Net loss attributable to:
Limited partners' equity
General partnership interest in a holding
subsidiary held by Brookfield
Participating non-controlling interests - in a holding
subsidiary - Redeemable/Exchangeable units
held by Brookfield
Net loss attributable to Unitholders
Depreciation
Unrealized financial instruments gain
Deferred income tax expense (recovery)
Other
Funds From Operations
Weighted average Units outstanding(1)
(1)
Includes GP interest, Redeemable/Exchangeable partnership units, and LP Units.
2017
2016
2017
2016
Per unit
$
(38) $
(26) $
(0.22) $
(0.16)
(1)
-
-
-
(0.22) $
0.46
(0.01)
0.10
(21)
(47) $
144
(4)
(51)
(28)
(67) $
143
(3)
32
38
143 $
$
$
-
-
(0.16)
0.48
(0.01)
(0.17)
0.04
0.18
12
54 $
0.13
0.46 $
312.63
299.06
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 40
CONTRACT PROFILE
We operate the business on a largely contracted basis to provide a high degree of predictability in
Funds From Operations. 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.
In Brazil and Colombia, we also expect power prices will continue to be supported by the need to
build new supply over the medium to long term to serve growing demand. In these markets contracting for
power is the only current mechanism to buy and sell power, and therefore we would expect to capture
rising prices as we re-contract our power over the medium term.
The following table sets out our contracts over the next five years for generation output in North
America, Europe and certain other countries, assuming long-term average on a proportionate basis. The
table excludes Brazil and Colombia, where we would expect the energy associated with maturing
contracts to be re-contracted in the normal course given the construct of the respective power markets. In
these countries we currently have a contracted profile of approximately 90% and 70% respectively, of the
long-term average and we would expect to maintain this going forward.
FOR THE YEAR ENDED DECEMBER 31
Generation (GWh)
Contracted(1)
Hydroelectric
North America
United States(2)
Canada
Wind
North America
United States
Canada
Europe
Other(3)
Solar
Contracted on a proportionate basis
Uncontracted on a proportionate basis
Long-term average on a proportionate basis
Non-controlling interests
Total long-term average
2018
2019
2020
2021
2022
7,126
5,051
12,177
7,011
5,051
12,062
6,306
3,584
9,890
6,099
3,091
9,190
4,791
3,045
7,836
1,316
1,197
2,513
458
127
3,098
456
15,731
1,438
17,169
12,768
29,937
1,302
1,197
2,499
458
127
3,084
456
15,602
1,567
17,169
12,768
29,937
1,261
1,197
2,458
404
127
2,989
456
13,335
3,834
17,169
12,768
29,937
1,226
1,197
2,423
397
127
2,947
456
12,593
4,576
17,169
12,768
29,937
1,214
1,197
2,411
391
127
2,929
456
11,221
5,948
17,169
12,768
29,937
Contracted generation - as at December 31, 2017
% of total generation on a proportionate basis
92 %
91 %
78 %
73 %
65 %
Price per MWh - total generation on a
proportionate basis
(1)
88
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 to 2022, on a proportionate basis, there is
38 GWh contributed from assets under construction that meet the aforementioned conditions.
Includes generation of 820 GWh for 2018 and 705 GWh for 2019 GWh secured under financial contracts.
Includes generation from China, India, Malaysia, Thailand, South Africa and Uruguay.
81 $
76 $
75 $
82 $
$
(2)
(3)
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 41
Our North American portfolio has a weighted-average remaining contract duration of 20 years (on
a proportionate basis). Over the next five years, five contracts at our hydroelectric facilities are expiring,
including one in 2020, two in 2021 and two in 2022 with annual long-term average (on a proportionate
basis) of 1,467 GWh, 850 GWh and 1,271 GWh, respectively. We expect on average to recontract
expiring contracts at levels equal to or greater than the rates of the expiring contracts. The majority of the
expiring contracts are in line with current merchant prices.
In our Brazilian and Colombian portfolios, we have a weighted-average remaining duration on our
contracts of 8 years and 2 years (on a proportionate basis), respectively. We continue to focus on
securing long-term contracts while maintaining a certain percentage of uncontracted generation so as to
mitigate hydrology risk.
In our European wind portfolio, we have a weighted-average remaining duration of 9 years (on a
proportionate basis).
In other countries we have a weighted-average remaining duration of 18 years (on a
proportionate basis).
The majority of Brookfield Renewable’s long-term power purchase agreements within our North
American and European businesses are with investment-grade rated or creditworthy counterparties. The
overall composition of our contracted generation on a proportionate basis under power purchase
agreements is comprised of Brookfield (42%), public power authorities (21%), distribution companies
(18%) and industrial users (19%).
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 42
PART 5 - LIQUIDITY AND CAPITAL RESOURCES
Capitalization
A key element of our financing strategy is to raise the majority of our debt in the form of asset-
specific, non-recourse borrowings at our subsidiaries on an investment-grade basis.
The following table summarizes our capitalization as at December 31:
(MILLIONS, EXCEPT AS NOTED)
Credit facilities(1)
Corporate borrowings(2)
Subsidiary borrowings(3)(4)
Long-term indebtedness
Deferred income tax liabilities, net of deferred income tax assets
Equity
Total capitalization
$
2017
887
$
1,665
8,774
11,326
3,411
14,282
$
29,019
$
2016
673
1,556
7,953
10,182
3,652
12,672
26,506
Debt to total capitalization
38%
(1) Comprised of $685 million borrowed under unsecured corporate credit facilities guaranteed by Brookfield Renewable and $202
39%
million borrowed under a subscription credit facility of a Brookfield sponsored private fund.
(2) Amounts are unsecured and guaranteed by Brookfield Renewable.
(3) Asset-specific, non-recourse borrowings secured against the assets of certain Brookfield Renewable subsidiaries.
(4) Net of cash and cash equivalents on TerraForm Global's balance sheet which, under the indenture, is not available for
distribution.
Credit facility draws have increased by $214 million to $887 million since December 31, 2016.
The increase is primarily attributable to draws related to the acquisition of TerraForm Global. The draw on
the subscription facility, which matures in 2019, is expected to be repaid in 2018.
The strengthening of the Canadian dollar against the U.S. dollar during the year ended December
31, 2017 resulted in an increase in corporate borrowings of $109 million from December 31, 2016.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 43
Available liquidity
The following table summarizes the available liquidity as at December 31:
2017
359 $
$
(191)
168
159
2016
223
(135)
88
136
(MILLIONS)
Consolidated cash and cash equivalents(1)
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(2)
Issued letters of credit
1,890
(673)
(250)
967
Available portion of credit facilities
Available liquidity
1,191
(1) Net of cash and cash equivalents on TerraForm Global's balance sheet which, under the indenture, is not available for
2,090
(685)
(193)
1,212
1,539 $
$
distribution.
(2) Draws were comprised of $685 million borrowed under unsecured corporate credit facilities guaranteed by Brookfield
Renewable. Excludes the $202 million borrowed under a subscription credit facility of a Brookfield sponsored private fund.
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, up-financings on subsidiary borrowings and proceeds
from the issuance of various securities through public markets.
Credit facilities and subsidiary borrowings
During the year ended December 31, 2017 we completed the following financing activities:
• Extended the maturity of our $1.6 billion corporate credit facility by one year to June 2022;
•
Increased the unsecured revolving credit facility provided by Brookfield Asset Management from
$200 million to $400 million; and
• Financed $3.1 billion of long-term debt at average rates of 4.5% reducing our proportionate
floating rate exposure to 13% and extended our proportionate average term to maturity to 10
years.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 44
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:
(MILLIONS EXCEPT AS NOTED)
Corporate borrowings
Credit facilities
Proportionate subsidiary borrowings
Hydroelectric
Wind
Solar, storage and other
Total proportionate debt
Proportionate unamortized financing
fees, net of unamortized premiums
Brookfield Renewable's share
Subsequent financings(1)
Equity accounted borrowings
Non-controlling interests
2017
2016
Weighted-average
Weighted-average
Interest
Term
rate (%)
(years)
Interest
Term
rate (%)
(years)
4.5
2.6
6.1
5.1
5.7
5.8
6.4
4.5
$
1,670
887
10.5
11.3
9.2
10.5
3,741
1,286
733
5,760
4.5
1.9
6.5
4.8
5.1
6.1
7.4
4.5
$
1,562
673
8.6
12.8
9.6
9.5
3,640
1,030
217
4,887
$
8,317
$
7,122
(47)
8,270
(33)
(834)
4,363
(45)
7,077
-
(233)
3,338
As per IFRS Statements
(1)
$ 10,182
Adjusted to reflect the financing initiatives, associated with a hydroelectric and a storage facility, finalized subsequent to year-
end.
$ 11,766
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 45
The following table summarizes our undiscounted principal repayments, schedule amortization
and interest payable on a proportionate basis as at December 31, 2017:
(MILLIONS)
Principal repayments
Corporate borrowings and
2018
2019
2020
2021
2022 Thereafter
Total
credit facilities
159
202
377
-
984
835 $
2,557
Subsidiary borrowings
Hydro(1)
Wind
Solar, storage and other(1)
Total
Interest payable(2)
Corporate borrowings and
104
77
14
195
354
145
75
16
236
438
396
79
15
490
867
237
84
85
406
406
215
122
51
388
2,644
849
552
4,045
3,741
1,286
733
5,760
1,372
4,880 $
8,317
credit facilities
95
85
85
66
58
192 $
581
Subsidiary borrowings
Hydro(1)
Wind
Solar, storage and other(1)
225
61
44
330
216
54
39
309
200
51
39
290
169
47
38
254
154
43
30
796
178
136
1,760
434
326
227
1,110
2,520
Total
(1)
(2)
3,101
Adjusted to reflect the financing initiatives, associated with a hydroelectric and a storage facility, finalized subsequent to year-
end.
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.
1,302 $
425
394
320
285
375
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
2022 on acceptable terms and will do so opportunistically based on the prevailing interest rate
environment.
Our sole near term maturity is our C$200 million ($159 million) Series 3 medium-term notes which
mature in November 2018.
As part of the TerraForm Global transaction, Brookfield Renewable acquired assets with project
level financings that were in default prior to the acquisition, had outstanding principal amounts totaling
$342 million, and mature in 2031. As at December 31, 2017, the loans were not in compliance with
certain covenants due to the SunEdison Bankruptcy, as well as issues with contractors under the
engineering, procurement and construction contract. The loan balances have been classified as current
as at December 31, 2017 on our IFRS financial statements. Brookfield Renewable is currently working
with all the lenders to cure such defaults and release the restrictions place on the projects. As we expect
a successful outcome, we have presented these loans according to their original maturity date in the
above maturity table. Except for the aforementioned defaults, Brookfield Renewable complied with all
material financial covenants as of December 31, 2017.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 46
The overall maturity profile and average interest rates associated with our borrowings and credit
facilities on a proportionate basis as at December 31 are as follows:
Corporate borrowings
Credit facilities
Subsidiary borrowings(1)
(1)
6.1
Adjusted to reflect the financing initiatives, associated with a hydroelectric and a storage facility, finalized subsequent to year-
end.
10.5
5.8
9.5
Average term (years) Average interest rate (%)
2017
6.4
4.5
2016
2017
7.4
4.5
4.5
2.6
2016
4.5
1.9
CONSOLIDATED STATEMENTS OF CASH FLOWS
The following table summarizes the key items in 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 on cash
2017
2016
2015
$
928 $
632 $
(27)
(328)
3
2,709
(3,191)
10
588
(33)
(623)
(19)
(87)
Increase (decrease) in cash and cash equivalents
$
576 $
160 $
Cash and cash equivalents as at December 31, 2017 totaled $799 million, representing an
increase of $576 million since December 31, 2016.
Operating Activities
Cash flows provided by operating activities totaled $928 million in 2017, a $296 million or 47%
increase from 2016. The increase is primarily due to a $162 million increase in Funds From Operations as
a result of a return to normal hydrology, advancement of our organic initiatives and contributions from
new acquisitions. The impact from the net change in working capital balances is supported by the table
below.
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.
Net change in working capital
The net change in working capital balances shown in the consolidated statements of cash flows
for the year ended December 31 is comprised of the following:
(MILLIONS)
Trade receivables and other current assets
Accounts payable and accrued liabilities
Other assets and liabilities
2017
(40)
32
(17)
(25)
$
$
2016
30
(160)
(7)
(137)
$
$
2015
(72)
2
8
(62)
$
$
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 47
Financing Activities
Cash flows used in financing activities totaled $27 million for the year ended December 31, 2017.
Long-term debt – borrowings, net of repayments, totaling $267 million were related to the growth in our
portfolio and our project-level 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 $294 million. To fund growth in our portfolio, capital markets activities resulted in the
issuance of LP Units and Preferred LP Units providing net proceeds of $598 million. Distributions of $539
million paid to Participating non-controlling interests – in operating subsidiaries was primarily due to
higher dividends paid out of our Colombian business and the sale of our Irish wind portfolio.
For
the year ended December 31, 2017, distributions paid
to LP Unitholders and
Redeemable/Exchangeable Partnership Unitholders were $591 million (2016: $522 million and 2015:
$461 million). We increased our distributions to $1.87 per LP Unit, an increase of 9 cents per LP Unit
which took effect in the first quarter of 2017. The distributions paid to preferred shareholders, preferred
limited partners’ unitholders and participating non-controlling interests - in operating subsidiaries totaled
$590 million (2016: $156 million and 2015: $239 million).
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.
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).
Investing Activities
Cash flows used in investing activities totaled $328 million for the year ended December 31,
2017. Our acquisitions of TerraForm Global and an Irish wind facility along with investments in TerraForm
Power and a European storage portfolio, totaled $62 million, net of cash acquired. Our continued
investment in the development of power generating assets and sustainable capital expenditures was
$217 million and $138 million, respectively. Proceeds from the sale of the Irish wind facility were $150
million.
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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 48
SHARES AND UNITS OUTSTANDING
Shares and units outstanding as at December 31 are as follows:
Class A Preference Shares
Balance, beginning of year
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(1)
Preference Shares exchanged for Preferred LP Units
Balance, end of year
GP interest
2017
2016
31,035,967
33,921,463
-
(2,885,496)
31,035,967
31,035,967
17,885,496
10,000,000
-
7,000,000
8,000,000
2,885,496
27,885,496
17,885,496
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
Balance, end of year
166,839,324
143,188,170
13,247,000
23,352,208
302,037
298,946
180,388,361
166,839,324
Total LP Units on a fully-exchanged basis(2)
(1)
296,497,947
Subsequent to the end of the year, Brookfield Renewable issued 10,000,000 Series 13 Preferred LP Units. See “PART 8 -
Subsequent Events”.
The fully-exchanged amounts assume the exchange of all Redeemable/ Exchangeable partnership units for LP Units.
310,046,984
(2)
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 49
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
2017
2016
2015
2017
2016
2015
$
$
26 $
28 $
25 $
15 $
30 $
1 $
25 $
26 $
25 $
12 $
31
-
interests - in operating subsidiaries
$ 539 $ 119 $ 208 $ 539 $ 119 $ 208
GP interest and Incentive distributions
$
35 $
24 $
12 $
34 $
23 $
12
Redeemable/Exchangeable partnership units
$ 243 $ 232 $ 217 $ 242 $ 230 $ 216
LP Units
$ 328 $ 281 $ 239 $ 315 $ 269 $ 233
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
February 2018
Amount of
Increase
$0.10
$0.11
$0.12
$0.09
$0.09
CONTRACTUAL OBLIGATIONS
Annual
Distribution
$1.55
$1.66
$1.78
$1.87
$1.96
Distribution
Effective Date
March 2014
March 2015
March 2016
March 2017
March 2018
Please see Note 26 – Commitments, contingencies and guarantees in the audited annual
consolidated financial statements, for further details on the following:
• Commitments – Water, land, and dams usage agreements, and agreements and conditions
on committed acquisitions of operating portfolios and development projects
• Contingencies – Legal proceedings, arbitrations and actions arising in the normal course of
business, and providing for letters of credit
• Guarantees – Nature of all the indemnification undertakings
OFF-STATEMENT OF FINANCIAL POSITION ARRANGEMENTS
Brookfield Renewable has no off-statement of financial position financing arrangements.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 50
PART 6 - SELECTED ANNUAL AND QUARTERLY INFORMATION
HISTORICAL OPERATIONAL AND FINANCIAL INFORMATION
YEAR ENDED DECEMBER 31
(MILLIONS, EXCEPT AS NOTED)
Operational information:
Capacity (MW)
Total generation (GWh)
Long-term average generation
Actual generation
Proportionate generation (GWh)
Long-term average generation
Actual generation
Average revenue ($ per MWh)
Additional financial information:
Net (loss) income attributable to
Unitholders
Basic income (loss) per LP Unit(1)
Consolidated Adjusted EBITDA(2)
Proportionate Adjusted EBITDA(2)
Funds From Operations(2)
Adjusted Funds From Operations(2)
Funds From Operations per LP Unit
Distribution per LP Unit
AS AT DECEMBER 31
2017
2016
2015
2014
2013
16,369
10,731
7,284
6,707
5,849
42,334
43,385
38,982
34,071
24,467
23,332
22,315
22,548
20,303
22,222
23,251
23,968
70
22,362
20,222
71
18,749
17,662
71
17,942
18,173
78
17,050
18,927
79
$
(56) $
(65) $
3 $
(0.18)
1,751
1,142
581
513
1.90
1.87
(0.23)
1,499
942
419
352
1.45
1.78
0.10
1,224
907
467
407
1.69
1.66
114 $
0.42
1,219
1,008
560
502
2.07
1.55
137
0.52
1,211
1,055
594
538
2.24
1.45
2014
2017
2016
2015
721
30,904
206
27,737
197
19,507
273
19,849
10,182
3,802
15,065
11,766
3,588
16,622
2013
(MILLIONS, EXCEPT AS NOTED)
Property, plant and equipment, at fair value $ 27,096 $ 25,257 $ 18,358 $ 18,566 $ 15,741
290
Equity-accounted investments
Total assets
16,999
Long-term debt and credit facilities
Deferred income tax liabilities
Total liabilities
Participating non-controlling interests - in
operating subsidiaries
General partnership interest in a holding
subsidiary held by Brookfield
Participating non-controlling interests - in
a holding subsidiary - Redeemable/
2,657
Exchangeable units held by Brookfield
796
Preferred equity
-
Preferred limited partners' equity
2,726
Limited partners' equity
7,536
Total equity
Debt to capitalization
41%
(1) For the year ended December 31, 2017, weighted average LP Units, Redeemable/Exchangeable partnership units and GP
2,680
576
324
3,448
12,672
38%
2,843
616
511
3,956
14,282
40%
2,559
610
128
2,827
8,763
39%
2,865
728
-
3,167
8,881
40%
7,678
2,637
10,968
7,338
2,695
10,744
6,623
2,265
9,463
6,298
1,303
2,587
2,062
5,589
54
59
58
55
52
interest totaled 305.8 million (2016: 288.7 million, 2015: 275.6 million, 2014: 271.1 million and 2013: 265.3 million).
(2) Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures”.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 51
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
Net income (loss) attributable to Unitholders
Basic (loss) earnings per LP Unit
Consolidated Adjusted EBITDA
Proportionate Adjusted EBITDA
Funds From Operations
Funds From Operations per Unit
Distribution per LP Unit
2017
Q4
12,198
11,913
6,030
5,890
Q3
Q2
Q1
Q4
9,098 10,674 10,364 10,319
8,728
9,370 11,618 10,484
5,739
5,889
6,279
5,053
4,734
6,161
6,719
5,198
2016
2015
Q3
Q2
9,092 10,728
8,792
7,522
6,214
5,068
5,197
4,395
Q1
8,843
9,029
5,341
5,896
Q4
6,067
6,117
4,609
4,553
Q3
5,164
4,992
3,948
3,715
Q2
6,929
6,400
5,348
4,834
$
(67) $
(43) $
38 $
16 $
(47) $
(33) $
(28) $
43 $
(26) $
(17) $
17 $
(0.22)
453
295
143
0.46
(0.14)
381
233
91
0.29
0.13
460
311
181
0.61
0.05
457
303
166
0.55
(0.16)
326
189
54
0.18
(0.12)
335
213
73
0.24
(0.11)
380
237
105
0.37
0.16
458
303
187
0.68
(0.09)
261
192
88
0.32
0.468
0.468
0.468
0.468
0.445
0.445
0.445
0.445
0.415
(0.07)
243
189
80
0.28
0.415
0.07
381
261
146
0.53
0.415
Q1
6,307
5,823
4,844
4,560
29
0.10
339
265
153
0.56
0.415
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 52
PROPORTIONATE RESULTS FOR THE FOURTH QUARTER
The following chart reflects the generation and summary financial figures on a proportionate basis for the three months ended December 31:
(GWh)
(MILLIONS)
Actual Generation LTA Generation
Revenues
Adjusted EBITDA
Funds From
Operations
Net Income (Loss)
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Hydroelectric
North America
Colombia
Brazil
Wind
North America
Europe
Brazil
Solar, Storage & Other
Corporate
Total
3,076
2,589
3,143
3,142 $
217 $
162 $
144 $
91 $
100 $
47 $
(28)$
(21)
978
867
924
451
935
978
989
891
4,921
3,964
5,056
5,022
51
64
332
56
46
264
26
43
213
28
33
152
648
128
74
850
119
-
404
149
74
627
143
-
693
146
82
921
53
-
454
181
82
717
-
-
53
12
7
72
26
-
38
15
5
58
10
1
37
7
6
50
22
10
29
8
4
41
2
(6)
14
33
147
22
6
5
33
14
13
26
86
19
3
2
24
(1)
7
(6)
(27)
22
(9)
3
16
(6)
(51)
(55)
(50)
5,890
4,734
6,030
5,739 $
430 $
333 $
295 $
189 $
143 $
54 $
(67)$
15
(4)
(10)
45
(1)
1
45
(9)
(73)
(47)
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 53
Funds From Operations increased by $89 million to $143 million supported by the return to long-
term average generation, advancement of our organic initiatives and contributions from new acquisitions.
Generation increased by 24% primarily as a result of improved hydrology in North America, as well as the
contribution from our recent acquisitions and commissioned development projects. In Q4 2016, we
experienced an unplanned outage at one of our Brazilian hydroelectric facilities resulting in 377 GWh of
lost generation. Average realized pricing of $73 per MWh increased by 4% due primarily to strong market
pricing North America.
Contributions from our recent acquisitions and the commissioning of development projects
contributed $10 million to Funds From Operations for the quarter. The sale of the 137 MW Irish wind
facility in the first quarter of 2017 would have contributed $2 million of Funds From Operations in the
quarter.
Net loss attributable to Unitholders decreased by $20 million over the prior year as the above
noted increase in Funds From Operations was offset primarily by additional depreciation on our growing
portfolios and deferred tax expenses attributable to the U.S. tax reforms.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 54
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 5 -
Risk Management and Financial Instruments in the audited annual 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 – including
Canadian dollar, Brazilian real,
Euro, British pound sterling,
Colombian peso, Indian rupee,
South African rand, Malaysian
ringgit, Thai baht and Chinese
yuan – related to operations,
anticipated transactions, and
certain foreign currency debt.
Management of Risk
• Enter into long-term contracts that
specify the price at which
electricity is sold
• Maintain 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
• As of December 31, 2017, we had
approximately 92% (2016: 95%) of
2018 production, excluding Brazil
and Colombia, on a proportionate
basis under short-term and long-
term power purchase agreements
and financial contracts. See “Part
4 – Financial Performance Review
on Proportionate Information”
• 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 30% of our portfolio,
is proactively managed through
foreign currency contracts
• No foreign currency contracts to
hedge our South American and
Asian exposures – representing
30% 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
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December 31, 2017
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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
• Our proportionate floating rate
exposure represents 13% of our
total debt, after affecting for
variable rate debt that has been
hedged through the use of interest
rate swaps. Our floating rate
exposure arises primarily from our
South American operations, as we
have no interest rate swaps to
hedge our exposures 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, 2017, 99%
(2016: 95%) of Brookfield
Renewable’s trade receivables
were current
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Annual Report
December 31, 2017
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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,
2017, Brookfield Renewable
and its subsidiaries were in
compliance with majority of its
debt covenants except
covenants mentioned in Note
18 – Capital Management.
Management of Risk
• As at December 31, 2017,
available liquidity was $1.5 billion.
Liquidity is comprised of our share
of cash and cash equivalents,
available-for-sale securities and
undrawn corporate line of credit
available of $168 million, $159
million and $1.2 billion,
respectively. Details of the
available portion of credit facilities
and debt maturity ladder are
included in “PART 5 - 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
• Ensure access to public capital
markets and maintain a strong
investment grade credit rating
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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.
RISKS RELATED TO OUR OPERATIONS AND THE RENEWABLE POWER INDUSTRY
Changes to hydrology at our hydroelectric facilities, wind conditions at our wind energy facilities,
irradiance at our solar facilities or weather conditions generally at any of our 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 and upon wind, irradiance and weather conditions
generally. Hydrology, wind, irradiance 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 and solar energy are highly dependent on weather conditions and, in particular, on wind
conditions and irradiance, respectively. 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 or when a given project was
acquired. Similarly, projections of solar resources depend on assumptions about weather patterns,
shading and irradiance, which are inherently uncertain and may not be consistent with actual conditions
at the site. A sustained decline in water flow at our hydroelectric facilities or in wind conditions at our wind
energy facilities or of irradiance at our solar 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 harvest. 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; 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.
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As our contracts expire, we may not be able to replace them with agreements on similar terms.
Certain power purchase agreements in our portfolio will be subject to re-contracting in the future.
If the price of electricity in power markets is declining at the time of such re-contracting, it may impact our
ability to re-negotiate or replace these contracts on terms that are acceptable to us, or at all. We cannot
provide any assurance that we will be able to re-negotiate or replace 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 re-negotiate 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, 2017, approximately 42% of our 2018
contracted generation (on a proportionate basis) was with Brookfield entities, the majority of which are not
publicly rated and whose obligations are not guaranteed by Brookfield Asset Management.
Increases in water rental costs (or similar fees) or changes to the regulation of water supply may
impose additional obligations on Brookfield Renewable.
Water rights are generally owned or controlled by governments that reserve the right to control
water levels or impose water-use requirements as a condition of license renewal that differ from those
arrangements in place today. We are required to pay taxes, make rental payments or pay similar fees for
use of water and related rights once our hydroelectric projects are in commercial operation. Significant
increases in water rental costs or similar fees or changes in the way that governments regulate water
supply could, if imposed at a material number of our assets in our portfolio, have a material adverse effect
on our assets, liabilities, business, financial condition, results of operations and cash flow.
Advances in technology could impair or eliminate the competitive advantage of our projects.
Technology related to the production of renewable power and conventional power generation are
continually advancing, resulting in a gradual decline in the cost of producing electricity. If advances in
technology further reduce the cost of producing power, the competitive advantage of our existing 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.
The amount of uncontracted generation in our portfolio may increase.
As at December 31, 2017, approximately 72% of our generation (on a proportionate basis) was
contracted over the following five years under long-term, fixed price contracts with creditworthy
counterparties. In each of 2016 and 2017, 91% of our generation (on a proportionate basis) was
contracted. The portion of our portfolio that is uncontracted may increase gradually over time. While
increases in uncontracted generation may allow us to be opportunistic and take advantage of high spot-
market prices, it will also increase our exposure to variability in power prices, which could, in certain
circumstances, have an adverse effect on our business, financial condition, results of operations and
cash flows.
There are general industry risks associated with the power markets in which we operate.
We currently operate in power markets in North America, South America, Europe and Asia, each
of which is affected by competition, price, supply of and demand for power, the location of import/export
transmission lines and overall political, economic and social conditions and policies. Our operations are
also largely concentrated in a relatively small number of countries, and accordingly are exposed to
country-specific risks (such as weather conditions, local economic conditions or political/regulatory
environments) that could disproportionately affect us. A general and extended decline in the North
American, South American, European or Asian economies, or in the economies of the specific countries
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
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in which we operate, or sustained conservation efforts to reduce electricity consumption, could have the
effect of reducing demand for electricity.
The MRE could be terminated or changed or Brookfield Renewable’s reference amount revised
downward.
In Brazil, hydroelectric power generators have access to 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
either case, this could have an adverse effect on our results of operations and cash flows.
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. 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 a
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 E.U.), federal, regional, state, provincial and local statutory and
regulatory standards and to maintain numerous licenses, permits and governmental approvals required
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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, including failures relating to wind turbines and solar
panels.
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. Wind turbines and solar panels have shorter
lifespans than hydroelectric assets. Spare parts for wind turbines and solar facilities and key pieces of
equipment may be difficult to acquire as a result of a limited number of suppliers of solar panels,
inverters, module turbines, towers and other system components and other equipment associated with
wind and solar power plants. In addition, warranties on equipment provided to TerraForm Power or
TerraForm Global by SunEdison Inc. or any of its affiliates likely will not be available to cover all or a
portion of the expense associated with faulty equipment as a result of the bankruptcy of SunEdison Inc.
Any resulting delay in replacing equipment could result in significant delays in returning facilities to full
operation, which could adversely impact our business and financial condition.
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 may be exposed to force majeure events.
The occurrence of a significant event that disrupts the ability of our generation assets to produce
or sell power for an extended period, including events which preclude customers from purchasing
electricity, could have a material adverse effect on our assets, liabilities, business, financial condition,
results of operations and cash flow. In addition, force majeure events affecting our assets could result in
damage to the environment or harm to third parties or the public, which could expose us to significant
liability. Our generation assets could be exposed to severe weather conditions, natural disasters and
potentially catastrophic events. An assault or an act of malicious destruction, cyber-attacks, sabotage or
terrorism committed on our generation assets could also disrupt our ability to generate or sell power. In
certain cases, there is the potential that some events may not excuse Brookfield Renewable from
performing its obligations pursuant to agreements with third parties and therefore may expose Brookfield
Renewable to liability. In addition, many of our generation assets are located in remote areas which may
make access for repair of damage difficult.
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We may be exposed to uninsurable losses.
While we maintain certain insurance coverage, such insurance may not continue to be offered on
an economically feasible basis, may not cover all events that could give rise to a loss or claim involving
our assets or operations, and may not cover all of our assets. If our insurance coverage is insufficient and
we are forced to bear such losses or claims, our financial position could be materially and adversely
affected. In addition, Brookfield Renewable participates in certain shared insurance arrangements with
Brookfield, allowing us to benefit from lower premiums and other economies of scale. In particular, we
share third party excess liability, crime, employee dishonesty, director and officer, and errors and
omissions insurance coverage. Under such shared policies, claim limits may also be shared between us
and Brookfield meaning that any claim by one insured party in a given year reduces the amount that each
other insured party can claim. Consequently, there is a risk that Brookfield Renewable’s ability to claim in
a given year could be eroded by claims made by Brookfield affiliates who are also covered by a shared
policy but that are not part of Brookfield Renewable, which could have an adverse effect on our financial
position.
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 such 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 or decommissioning of existing interconnection facilities or
transmission facilities, the lack of adequate capacity on such interconnection or transmission facilities,
curtailment as a result of transmission facility downtime, or the failure of any relevant jurisdiction to
expand 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
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additional material expenditures. Additional environmental, health and safety issues relating to presently
known or unknown matters may require unanticipated expenditures, or result in fines, penalties or other
consequences (including changes to operations) that may be material and adverse to our business and
results of operations.
We may 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, cash flow and
reputation. 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.
Counterparties to our contracts may not fulfill their obligations
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. In addition, inadequate performance by counterparties to operation and maintenance
contracts related to certain of our assets or investments may increase the risk of operational or
mechanical failures of such facilities.
Seeking to enforce a contract through the courts may take significant amounts of time and
expense with no certainty of success.
High litigation costs and long delays make resolving commercial disputes in court time consuming
and expensive. Such costs can be difficult to calculate with certainty. In addition, in certain jurisdictions
in which we currently conduct business or may seek to conduct business in the future, there can be
uncertainty regarding the interpretation and application of laws and regulations relating to the
enforceability of contractual rights. Our business could be adversely affected if we are unsuccessful in
enforcing contracts through the courts or if we incur significant amounts of time and expenses seeking to
do so.
The operation of our generating facilities could be affected by local communities.
We may become impacted by the interests of local communities and stakeholders, including in
some cases, Indigenous peoples, that affect the operation of our facilities. Certain of these communities
may have or may develop interests or objectives which are different from or even in conflict with our
objectives, including the use of our project lands and waterways near our facilities. Any such differences
could have a negative impact on the successful operation of our facilities. As well, disputes surrounding,
and settlements of, Indigenous land claims regarding lands on or near our generating assets could
interfere with operations and/or result in additional operating costs or restrictions.
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 U.S. government as well as those of various non-U.S.
jurisdictions. These laws and regulations may apply to Brookfield Renewable, our Service Provider, our
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December 31, 2017
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subsidiaries, individual directors, officers, employees and third-party agents. In particular, our non-U.S.
operations are subject to U.S. 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. The acquisition of businesses with weak internal controls to manage
the risk of illegal or corrupt acts may create additional risk of financial loss, regulatory censure and/or
harm to the reputation of Brookfield Renewable. In addition, programs, policies, standards, methodologies
and training, no matter how well designed, do not provide absolute assurance of effectiveness.
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.
There can be no guarantee that newly developed technologies that we invest in will perform as
anticipated.
We may invest in and use newly developed, less proven, technologies in our development
projects or in maintaining or enhancing our existing assets. There is no guarantee that such new
technologies will perform as anticipated. The failure of a new technology to perform as anticipated may
materially and adversely affect the profitability of a particular development project.
Performance of our Operating Entities may be harmed by future labor disruptions and
economically unfavorable collective bargaining agreements.
Certain of Brookfield Renewable’s subsidiaries are parties to collective agreements that expire
periodically and those subsidiaries may not be able to renew their collective agreements without a labor
disruption or without agreeing to significant increases in cost. In the event of a labor disruption such as a
strike or lock-out, the ability of our generation assets to generate electricity may be impaired and our
results from operations and cash flow could be materially and adversely affected.
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The economic viability of the feedstock supplier of our biomass cogeneration facilities is linked to
the market price for sugar and ethanol, and the prices of these commodities are cyclical and are
affected by general economic conditions in Brazil and globally.
The principal feedstock of our 175 MW biomass cogeneration facilities is “bagasse” – a dry,
fibrous residue left after the extraction of juice from sugar cane. The biomass cogeneration facilities that
we own are attached to mills that are suppliers of the bagasse, which they provide to these facilities in
exchange for some of the steam and electricity that the facilities produce. The excess electricity that is
not delivered to the relevant mill is sold under contract to commercial offtakers, to the government by way
of a regulated auction process or directly into the market. The viability of these mills depends on
prevailing market prices for ethanol and sugar as well as other factors that are out of our control. These
mills depend on a single supplier of bagasse, who is the owner of each of these mills. The supplier of
these mills, and therefore of our biomass cogeneration facilities, is currently in financial distress and if
such supplier becomes unavailable, we would have to procure bagasse from other sources, which could
have a material adverse effect on the value of this investment.
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 issuances of equity. There is debt throughout our corporate structure that will need to be replaced
from time to time: Brookfield Renewable, BRELP and the Holding Entities have corporate debt and many
Operating Entities have limited recourse project level debt (which is non-recourse to Brookfield
Renewable). 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.
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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.
RISKS RELATED TO OUR GROWTH STRATEGY
We may be unable to identify sufficient investment opportunities and complete transactions as
planned.
Our strategy for building LP Unitholder value is to seek to acquire or develop high-quality assets
and businesses that generate sustainable and increasing cash flows, with the objective of achieving
appropriate risk-adjusted returns on our invested capital over the long-term. However, there is no
certainty that we will be able to find sufficient investment opportunities and complete transactions that
meet our investment criteria. Our investment criteria consider, among other things, the financial,
operating, governance and strategic merits of a proposed acquisition 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. In addition, we occasionally seek to recycle capital to fund future
acquisitions and the development and construction of new facilities by selling assets; however, we may
not be able to complete such sales on desired timelines or at favourable prices.
Future growth of our portfolio may subject us to additional risks and the expected benefits of our
transactions, including acquisitions, 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
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December 31, 2017
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according to expectations, could have a material adverse effect on Brookfield Renewable’s business,
financial condition and results of operations. In addition, if returns are lower than anticipated from new
acquisitions, we may not be able to achieve growth in our distributions in line with our stated goals and
the market value of our Units may decline.
There are several factors which may affect our ability to develop existing sites and find new sites
suitable for the development of greenfield power projects.
Our ability to realize our greenfield development growth plans is dependent on our ability to
develop existing sites and find new sites suitable for development into viable projects. Our ability to
maintain a development permit often requires specific development steps to be undertaken. Successful
development of greenfield renewable power projects is typically dependent on a number of factors,
including: the ability to secure an attractive site on reasonable terms; accurately measuring resource
availability at levels deemed economically attractive for continued project development; the ability to
secure approvals, licenses and permits; the acceptance of local stakeholders, including in some cases,
Indigenous peoples; the ability to secure transmission interconnection access or agreements; and the
ability to secure a long-term power purchase agreement or other sales contract on reasonable terms.
Each of these factors can be critical in determining whether or not a particular development project might
ultimately be suitable for construction. Failure to achieve any one of these elements may prevent the
development and construction of a project. When this occurs we may lose all of our investment in
development expenditures and may be required to write-off project development assets.
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 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.
Brookfield has no obligation to source acquisition opportunities for us and we may not have
access to all renewable power acquisitions that Brookfield identifies.
Our ability to grow through acquisitions depends on Brookfield’s ability to identify and present us
with acquisition opportunities. Brookfield established Brookfield Renewable to hold and acquire, directly
or indirectly, renewable power generating operations and development projects on a global basis.
However, Brookfield has no obligation to source acquisition opportunities specifically for us. In addition,
Brookfield has not agreed to commit any minimum level of dedicated resources to us for the pursuit of
renewable power-related acquisitions. Moreover, pursuant to a relationship agreement between
TerraForm Power and Brookfield, Brookfield has, subject to certain exceptions, designated TerraForm
Power (of which Brookfield Renewable owns approximately 16%) as its primary vehicle for the acquisition
of operating solar and wind assets in North America and Western Europe. There are a number of factors
which could materially and adversely impact the extent to which suitable acquisition opportunities are
made available to Brookfield Renewable from Brookfield, for example:
•
it is an integral part of Brookfield’s (and our) strategy to pursue the acquisition or development
of renewable power assets through consortium arrangements with institutional investors,
strategic partners or financial sponsors and to form partnerships to pursue such acquisitions
on a specialized or global basis. Although Brookfield has agreed with us that it will not enter
into any such arrangements that are suitable for us without giving us an opportunity to
participate in them, there is no minimum level of participation to which we will be entitled;
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December 31, 2017
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•
the same professionals within Brookfield’s organization that are involved in acquisitions that
are suitable for us are responsible for the consortiums and partnerships referred to above, as
well as having other responsibilities within Brookfield’s broader asset management business.
Limits on the availability of such individuals will likewise result in a limitation on the availability
of acquisition opportunities for us;
• Brookfield will only recommend acquisition opportunities that it believes are suitable for us.
Our focus is on assets where we believe that our operations-oriented approach can be
deployed to create value. Accordingly, opportunities where Brookfield cannot play an active
role in influencing the underlying operating company or managing the underlying assets may
not be suitable for us, even though they may be attractive from a purely financial perspective.
Legal, regulatory, tax and other commercial considerations will likewise be an important
consideration in determining whether an opportunity is suitable and could limit our ability to
participate in these certain investments; and
in addition to structural limitations, the question of whether a particular acquisition is suitable
is highly subjective and is dependent on a number of factors including an assessment by
Brookfield of our liquidity position, the risk profile of the opportunity, its fit with the balance of
our then current operations and other factors. If Brookfield determines that an opportunity is
not suitable for us, it may still pursue such opportunity on its own behalf, or on behalf of a
Brookfield sponsored partnership or consortium.
•
In making these determinations, Brookfield may be influenced by factors that result in a
misalignment or conflict of interest. See Item 3.D “Risk Factors — Risks Related to our Relationship with
Brookfield” and Item 7.B “Related Party Transactions — Conflicts of Interest and Fiduciary Duties”.
We do not control all our operations and investments.
We have structured some of our operations and investments as joint ventures, partnerships and
consortium arrangements. An integral part of our strategy is to participate with institutional investors in
Brookfield sponsored or co-sponsored consortiums for asset acquisitions and as a partner in or alongside
Brookfield sponsored or co-sponsored partnerships that target acquisitions that suit our profile. These
arrangements are driven by the magnitude of capital required to complete acquisitions of renewable
assets and other industry-wide trends that we believe will continue. Such arrangements involve risks not
present where a third party is not involved, including the possibility that partners or co-venturers might
become bankrupt or otherwise fail to fund their share of required capital contributions. Additionally,
partners or co-venturers might at any time have economic or other business interests or goals different
from Brookfield Renewable and Brookfield.
Joint ventures, partnerships and consortium investments generally provide for a reduced level of
control over an acquired company because governance rights are shared with others or in some cases
may be delegated to a third party like Brookfield. Consequently, management and operations, as well as
the timing and nature of any exit, are often made by a majority vote of the investors or by separate
agreements that are reached with respect to individual decisions. For example, when we participate with
institutional investors in Brookfield sponsored or co-sponsored consortiums for asset acquisitions and as
a partner in or alongside Brookfield sponsored or co-sponsored partnerships, there is often a finite term to
the investment, which could lead to the investment being sold prior to the date we would otherwise
choose. Similarly, the recent acquisition of a 51% interest in TerraForm Power, which was made by
Brookfield Renewable together with its institutional partners, did not result in Brookfield Renewable
having control of TerraForm Power. Accordingly, decisions relating to the management and operation of
TerraForm Power and its assets are not made by Brookfield Renewable.
In addition, such operations may be subject to the risk that any joint venture, partnership or
consortium may make business, financial or management decisions with which we do not agree or the
management of the company may take risks or otherwise act in a manner that does not serve our
interests. Because we may not have the ability to exercise control over such operations, we may not be
able to realize some or all of the benefits that we believe will be created from Brookfield’s involvement. If
any of the foregoing were to occur, our financial condition and results of operations could suffer as a
result.
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December 31, 2017
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The sale or transfer of interests in certain of our operations that are joint ventures, partnerships or
consortium arrangements are subject to rights of first refusal or first offer, tag along rights or drag along
rights and some agreements in these operations provide for buy-sell or similar arrangements. Such rights
may be triggered at a time when we may not want them to be exercised and such rights may inhibit our
ability to sell our interest in an entity within the desired time frame or on any other desired basis. In
addition, the operations are also all subject to pre-emptive or default rights which may lead to the joint
venture or third parties compulsorily acquiring assets from the joint venture.
We may pursue acquisitions in new markets that are subject to foreign laws or regulations that
are more onerous or uncertain than the laws and regulations we are currently subject to.
We may pursue acquisitions in new markets that are regulated by foreign governments and
regulatory authorities and subject to foreign laws. For example, through the acquisition of TerraForm
Global, we acquired an additional 307 MW in Brazil, 302 MW in India, 167 MW in China, 66 MW in South
Africa, 39 MW in Thailand, 26 MW in Uruguay and 12 MW in Malaysia. Foreign laws or regulations may
not provide for the same type of legal certainty and rights, in connection with our contractual relationships
in such countries, as are afforded to our projects in, for example, the U.S., which may adversely affect our
ability to receive revenues or enforce our rights in connection with our foreign operations. In addition, the
laws and regulations of some countries may limit our ability to hold a majority interest in some of the
projects that we may develop or acquire, thus limiting our ability to control the development, construction
and operation of such projects. Any existing or new operations may also be subject to significant political,
economic and financial risks, which vary by country, and may include: changes in government policies or
personnel; changes in general economic conditions; restrictions on currency transfer or convertibility;
changes in labor relations; political instability and civil unrest; regulatory or other changes in the local
electricity market; and breach or repudiation of important contractual undertakings by governmental
entities and expropriation and confiscation of assets and facilities for less than fair market value.
Government policies 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 generally 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. Particularly in light of political changes in certain jurisdictions – including the United
States – 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 certain of our
projects in particular.
Brookfield Renewable may occasionally make purchases of securities, including the publicly
listed securities of other companies, the value of which could decline due to factors beyond our
control.
Brookfield may periodically recommend that Brookfield Renewable make investments in
securities, including the publicly traded securities or debt of other companies. For example, in 2017,
Brookfield Renewable, together with its institutional partners, acquired a 51% interest in TerraForm
Power, a Nasdaq listed public company, giving Brookfield Renewable an approximate 16% interest in the
publicly traded securities of TerraForm Power. Investments in securities are particularly subject to market
volatility and market disruptions, changes in interest and currency exchange rates, equity prices and other
economic and business factors beyond our control. In addition, at the time of any sales and settlements of
securities, the price we ultimately realize will depend on demand and liquidity in the market at that time
and may be materially lower than their current fair value. While investments in securities are not
expected to account for a large portion of Brookfield’s Renewable investments generally, a decline in the
value of such securities could result in returns that are lower than anticipated or even in the investment
being lost completely, which could mean that we are not be able to achieve growth in our distributions in
line with our stated goals and the market value of our units may decline.
Brookfield Renewable Partners L.P.
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OTHER RISKS RELATED TO BROOKFIELD RENEWABLE
Brookfield Renewable is a “foreign private issuer” under U.S. securities laws and is therefore
subject to disclosure obligations different from requirements applicable to U.S. domestic
registrants listed on the NYSE.
Although Brookfield Renewable is subject to the periodic reporting requirements of the Exchange
Act, the periodic disclosure required of foreign private issuers under the Exchange Act is different from
periodic disclosure required of U.S. domestic registrants. Therefore, there may be less publicly available
information about Brookfield Renewable than is regularly published by or about other public companies in
the U.S. Brookfield Renewable is exempt from certain other sections of the Exchange Act to which U.S.
domestic issuers are subject, including the requirement to provide our LP Unitholders with information
statements or proxy statements that comply with the Exchange Act. In addition, insiders and large LP
Unitholders of Brookfield Renewable are not obligated to file reports under Section 16 of the Exchange
Act, and certain corporate governance rules that are imposed by the NYSE will be inapplicable to
Brookfield Renewable.
We may be subject to the risks commonly associated with a separation of economic interest from
control within an organizational structure.
Our ownership and organizational structure is similar to structures whereby one company controls
another company which in turn holds controlling interests in other companies; thereby, the company at
the top of the chain may control the company at the bottom of the chain even if its effective equity position
in the bottom company is less than a controlling interest. Brookfield is the sole shareholder of the
Managing General Partner and, as a result of such ownership of the Managing General Partner,
Brookfield will be able to control the appointment and removal of the Managing General Partner’s
directors and, accordingly, will exercise substantial influence over us. In turn, we often have a majority
controlling interest or a significant influence in our investments. Even though Brookfield has an effective
economic interest in our business of approximately 60% as a result of its ownership of our LP Units and
the Redeemable/Exchangeable partnership units, over time Brookfield may reduce this economic interest
while still maintaining its controlling interest. This could lead to Brookfield using its control rights in a
manner that conflicts with the economic interests of our other Unitholders. For example, despite the fact
that we have the Conflicts Policy in place, which, 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.
We may be subject to the risks commonly associated with the incurrence of debt at multiple levels
within an organizational structure.
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.
We could become regulated as an “investment company” under the Investment Company Act
(and similar legislation in other jurisdictions) which would make it impractical for us to operate as
contemplated.
The Investment Company Act (and similar legislation in other jurisdictions) provides certain
protections to investors and imposes certain restrictions on companies that are registered as investment
companies. Brookfield Renewable is not an “investment company” under the Investment Company Act
and does not intend to become one. If Brookfield Renewable were to be deemed an investment company
under the Investment Company Act, we might be required to materially restrict or limit the scope of our
operations or plans as it would be impractical for us to operate as intended: certain agreements we have
with Brookfield would be impaired, the type and amount of acquisitions that we would be able to make as
a principal would be limited, and our business, financial condition and results of operations would be
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materially adversely affected. We would also be limited in the types of acquisitions that we might make,
and we might need to modify our organizational structure or dispose of assets of which we would not
otherwise dispose. Accordingly, we would be required to take extraordinary steps to address the situation,
such as the amendment or termination of our Master Services Agreement, the restructuring of Brookfield
Renewable and the Holding Entities, the amendment of the Amended and Restated Limited Partnership
Agreement of Brookfield Renewable or the termination of Brookfield Renewable, any of which could
materially adversely affect the value of our Units. In addition, if Brookfield Renewable were deemed to be
an investment company under the Investment Company Act, it would be taxable as a corporation for U.S.
federal income tax purposes, which could materially adversely affect the value of our Units.
Our failure to maintain effective internal controls could have a material adverse effect on our
business and the price of our Units.
Pursuant to Section 404 of the Sarbanes-Oxley Act, our management has delivered a report that
assesses the effectiveness of our internal controls over financial reporting (in which they concluded that
these internal controls are effective) and our independent registered public accounting firm has delivered
an attestation report on our management’s assessment of, and the operating effectiveness of, our internal
controls over financial reporting in conjunction with their opinion on our audited consolidated financial
statements. Failing to maintain adequate internal controls over financial reporting or to implement
required, new or improved controls, or difficulties encountered in their implementation, could cause us to
report material weaknesses in our internal controls over financial reporting and could result in a more than
remote possibility of errors or misstatements in our consolidated financial statements that would be
material. If we or our independent registered public accounting firm were to conclude that our internal
controls over financial reporting were not effective, investors could lose confidence in our reported
financial information and the price of our Units could decline. Our failure to achieve and maintain effective
internal controls could have a material adverse effect on our business, 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 the Service Provider.
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
the Operating Entities indirectly through BRELP and will hold any future acquisitions indirectly through
BRELP, the general partner of which is indirectly owned by Brookfield. As Brookfield Renewable’s only
substantial asset is the limited partnership interests that it holds in BRELP, except future rights under the
Voting Agreement, Brookfield Renewable does not have a right to participate directly in the management
or activities of BRELP or the Holding Entities, including with respect to the making of decisions (although
it has the right to remove and replace the BRELP GP LP).
Brookfield Renewable and BRELP depend on the management and administration services
provided by or under the direction of the Service Provider under our Master Services Agreement.
Brookfield personnel and support staff that provide services to us under our Master Services Agreement
are not required to have as their primary responsibility the management and administration of Brookfield
Renewable or BRELP or to act exclusively for either of us and our Master Services Agreement does not
require any specific individuals to be provided by Brookfield 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 annual consolidated financial statements
are considered critical accounting estimates as defined in Canadian National Instrument 51-102 –
Continuous Disclosure Obligations 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 volatility and other factors, some of which are highly uncertain, as described in the “Risk
Factors” section. The interrelated nature of these factors prevents us from quantifying the overall impact
of these movements on Brookfield Renewable’s financial statements in a meaningful way. These sources
of estimation uncertainty relate in varying degrees to substantially all asset and liability account balances.
Actual results could differ from those estimates.
CRITICAL ESTIMATES
Brookfield Renewable makes estimates and assumptions that affect the carrying value of assets
and liabilities, disclosure of contingent assets and liabilities and the reported amount of income and other
comprehensive income (“OCI”) for the year. Actual results could differ from these estimates. The
estimates and assumptions that are critical to the determination of the amounts reported in the
consolidated financial statements relate to the following:
(i)
Property, plant and equipment
The fair value of Brookfield Renewable’s property, plant and equipment is calculated using
estimates and assumptions about future electricity prices from renewable sources, anticipated long-term
average generation, estimated operating and capital expenditures, future inflation rates and discount
rates, as described in Note 12 - Property, plant and equipment, at fair value in our audited annual
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 annual
consolidated financial statements for further details.
Estimates of useful lives and residual values are used in determining depreciation. To ensure the
accuracy of useful lives and residual values, these estimates are reviewed on an annual basis.
(ii)
Financial instruments
Brookfield Renewable makes estimates and assumptions that affect the carrying value of its
financial instruments, including estimates and assumptions about future electricity prices, long-term
average generation, capacity prices, discount rates and the timing of energy delivery. Non-financial
instruments are valued using estimates of future electricity prices which are estimated by considering
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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 5 - Risk
Management and Financial Instruments in our audited annual 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 annual
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 2025 in North America and Colombia, 2023
in Europe, and 2021 in Brazil. Based on current supply and demand fundamentals, Brookfield
Renewable revised the year of new entry in North America to 2025 from 2023. The year of new entry is
viewed as the point when generators must build additional capacity to maintain system reliability and
provide an adequate level of reserve generation with the retirement of older coal fired plants and rising
environmental compliance costs in North America and Europe, and overall increasing demand in
Colombia and Brazil. For the North American and European businesses, Brookfield Renewable has
estimated a discount to these new-build wind prices to determine renewable electricity prices for
hydroelectric and wind facilities. In Brazil and Colombia, the estimate of future electricity prices is based
on a similar approach as applied in North America using a forecast of the all-in cost of development.
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 annual 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 annual 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.
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
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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. Management has
chosen to adopt the standard retrospectively with no restatement of comparative periods. The
assessment of financial assets and liabilities under the new classification methodology has been
completed. Hedging documentation has been updated for compliance with IFRS 9 and management has
updated risk management policies and internal controls to align with the new standard. Management has
also assessed the impact of the new impairment requirements for financial assets. There are no material
adjustments from the adoption of the standard.
(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. Management has
chosen to adopt the standard using the modified retrospective approach. This method results in a
cumulative catch-up adjustment to equity as of January 1, 2018 as if the standard had always been in
effect. Management has completed its review of material revenue streams. The majority of Brookfield
Renewable’s revenue streams are within the scope of IFRS 15 and are include the sale of energy,
capacity and renewable energy credits through power purchase agreements or through merchant
mechanisms. Based on management’s analysis, substantially all of the contracts currently in place for the
year beginning on January 1, 2018 do not contain a difference in the timing or measurement of revenue
recognition under the new standard and the impact of both the cumulative catch up and ongoing revenue
recognition is expected to not be material to the overall statements of Brookfield Renewable.
(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
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 has formed its
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December 31, 2017
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adoption working group and participated in planning sessions with Brookfield Asset Management.
Management continues to evaluate the impact of IFRS 16 on the consolidated financial statements.
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, 2017, 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, 2017, 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 foregoing, our management concluded that
our internal control over financial reporting was effective as of December 31, 2017. Management
excluded from its design and assessment of internal control over financial reporting the internal controls
of the 16 MW Shantavny wind project in Northern Ireland and TerraForm Global both of which were
acquired in 2017, whose total assets, net assets on a combined basis constitute approximately 7% and
5%, respectively, of the consolidated financial statement amounts as of December 31, 2017 and nil% of
revenues and net income, for the year then ended.
Internal control systems, no matter how well designed, have inherent limitations. Therefore, even
those systems determined to be effective can provide only reasonable assurance with respect to financial
statement preparation and presentation. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
Report of Independent Registered Public Accounting Firm
The effectiveness of our internal control over financial reporting as of December 31, 2017 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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December 31, 2017
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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, 2017, that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
SUBSEQUENT EVENTS
On January 16, 2018, Brookfield Renewable issued 10,000,000 Series 13 Preferred LP Units at a
price of C$25 per unit for gross proceeds of C$250 million ($201 million).
On January 19, 2018, Brookfield Renewable completed financing associated with its equity-
accounted 2.1 GW pumped storage facility in the United Kingdom by securing £60 million ($83 million) of
long-term debt and £90 million ($125 million) letter of credit facility. The long-term debt matures in 2021
and bears interest at LIBOR plus a margin of 2.75%.
On January 29, 2018, Brookfield Renewable completed R$130 million ($40 million) of financing
with respect to a 19 MW hydroelectric facility currently under construction in Brazil. The loan bears
interest at a rate of TJLP plus 2.15% and matures in 2038.
On February 15, 2018, Brookfield Renewable completed a refinancing associated with a 296 MW
hydroelectric facility in the United States. The financing was a $350 million interest only green bond
bearing interest at 4.5%, maturing in 2033. Proceeds were used to repay the existing principal amount of
$315 million and the excess was distributed to investors.
On February 22, 2018, TerraForm Global issued $400 million of senior notes at 6.13%, maturing
in March 2026. Along with cash on the balance sheet, proceeds were used to repay the existing $760
million of 9.75% senior notes due in 2022. Additionally, TerraForm Global secured a $45 million revolving
credit facility, maturing in February 2021.
On February 27, 2018, Brookfield Renewable completed a COP 750 billion ($262 million) bond
refinancing associated with the Colombian business.
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PART 9 - PRESENTATION TO STAKEHOLDERS AND PERFORMANCE MEASUREMENT
PRESENTATION TO PUBLIC STAKEHOLDERS
Equity
Brookfield Renewable’s consolidated equity interests include the non-voting LP Units held by
public LP Unitholders and Brookfield, Redeemable/Exchangeable limited partnership units in BRELP, a
holding subsidiary of Brookfield Renewable, held by Brookfield, and GP interest in BRELP held by
Brookfield. The LP Units and the Redeemable/Exchangeable partnership units have the same economic
attributes in all respects, except that the Redeemable/Exchangeable partnership units provide Brookfield
the right to request that their units be redeemed for cash consideration. In the event that Brookfield
exercises this right, Brookfield Renewable has the right, at its sole discretion, to satisfy the redemption
than cash, on a one-for-one basis. Brookfield, as holder of
request with LP Units, rather
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.
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 60% 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 40% is held by the public.
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 as well as the entity that owns the renewable power generating operations
acquired as part of the acquisition of TerraForm Global. Brookfield Renewable has also entered into a
voting agreement with its consortium partners in respect of the Colombian operations. The voting
agreements provide Brookfield Renewable the authority to direct the election of the Boards of Directors of
the relevant entities, among other things, and therefore provide Brookfield Renewable with control.
Accordingly, Brookfield Renewable consolidates the accounts of these entities.
Brookfield Renewable has also entered into a voting agreement with Brookfield, whereby
Brookfield Renewable gained certain rights in respect of TerraForm Power and its subsidiaries. This
voting agreement provides Brookfield Renewable the authority to direct the election of one member of the
Board of Directors of the relevant entity, among other things, and therefore provide Brookfield Renewable
with significant influence over TerraForm Power. Accordingly, Brookfield Renewable equity account the
accounts of these entities.
For entities previously controlled by Brookfield Asset Management, the voting agreements
entered into 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
annual consolidated financial statements for our policy on accounting for transactions under common
control.
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PERFORMANCE MEASUREMENT
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
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 analyze the operating performance of
companies.
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, unrealized gain or loss on financial instruments, non-cash gain or loss from equity-accounted
investments, distributions to preferred limited partners and other typical non-recurring items. Brookfield
Renewable adjusts for these factors as they may be non-cash, unusual in nature and/or are not factors
used by management for evaluating operating performance.
As compared to the preceding years, we revised our definition of Adjusted EBITDA to include our
proportionate share of Adjusted EBITDA from equity-accounted investments. In preceding years, we
included our proportionate share of Funds From Operations from equity-accounted investments. We
revised our definition as we believe it provides a more meaningful measure for investors to evaluate our
financial and operating performance on an allocable basis to Unitholders.
Funds From Operations and Funds From Operations per Unit
Funds From Operations is a non-IFRS measure used by investors to analyze net earnings from
operations without the effects of certain volatile items that generally have no current financial impact or
items not directly related to the performance of the business.
Brookfield Renewable uses Funds From Operations to assess the performance of the business
before the effects of deferred income taxes, depreciation, non-cash portion of non-controlling interests,
unrealized gain or loss on financial instruments, non-cash gain or loss from equity-accounted investments
and other typical non-recurring items as these are not reflective of the performance of the underlying
business. In our audited annual 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 believes that analysis and presentation of Funds From Operations on this
basis will enhance an investor’s understanding of the performance 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 analyze net
earnings from operations without the effects of certain volatile items that generally have no current
financial impact or items not directly related to the performance of the business but also adjusted for
sustaining capital expenditures.
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December 31, 2017
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Adjusted sustaining capital expenditures are an estimate made by management of the amount of
ongoing capital investment required to maintain the condition of all our facilities and current revenues.
Annually, Brookfield Renewable determines the fair value of its property, plant and equipment
using a 20-year discounted cash flow model with each operational facility having a 20-year capital plan. In
addition, the useful lives of property, plant and equipment are determined periodically by independent
engineers and are reviewed annually by management.
Management considers several items in estimating adjusted sustaining capital expenditures.
Such factors include, but are not limited to, review and analysis of historical capital spending, the annual
budgeted capital expenditures, management’s 5-year business plan, and independent third-party
engineering assessments.
Capital expenditures do not occur evenly over the life of our assets. Adjusted sustaining capital
expenditures are intended to reflect an average annual spending level based on the 20-year capital plan.
Accounting rules require us to recognize a significantly higher level of depreciation for our assets
than we are required to reinvest in the business as sustaining capital expenditures. This higher level of
depreciation is primarily attributed to: 1) our election to annually fair value property, plant and equipment
under IFRS; and 2) accounting useful life is not always reflective of the perpetual nature of a hydroelectric
facility.
Brookfield Renewable uses Adjusted Funds From Operations to also assess performance of the
business and defines it 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. Furthermore, these measures are not used by the CODM to assess Brookfield Renewable’s
liquidity.
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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
and payout ratio, future commissioning of assets, contracted nature of our portfolio, technology
diversification, acquisition opportunities, expected completion of acquisitions, financing and refinancing
opportunities, 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.
changes to hydrology at our hydroelectric facilities, to wind conditions at our wind energy facilities, to
irradiance at our solar facilities or to weather generally at any of our facilities; volatility in supply and
demand in the energy markets; our inability to re-negotiate or replace expiring power purchase
agreements on similar terms; increases in water rental costs (or similar fees) or changes to the regulation
of water supply; advances in technology that impair or eliminate the competitive advantage of our
projects; an increase in the amount of uncontracted generation in our portfolio; industry risks relating to
the power markets in which we operate; the termination of, or a change to, the MRE hydrological
balancing pool in Brazil; increased regulation of our operations; 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,
including relating to wind turbines and solar panels; dam failures and the costs and potential liabilities
associated with such failures; force majeure events; uninsurable losses; adverse changes in currency
exchange rates and our inability to effectively manage foreign currency exposure; availability and access
to interconnection facilities and transmission systems; health, safety, security and environmental risks;
disputes, governmental and regulatory investigations and litigation; counterparties to our contracts not
fulfilling their obligations; the time and expense of enforcing contracts against non-performing counter-
parties and the uncertainty of success; 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, which could expose us to cyber-attacks; newly developed technologies
in which we invest not performing as anticipated; labor disruptions and economically unfavorable
collective bargaining agreements; our inability to finance our operations due to the status of the capital
markets; operating and financial restrictions imposed on us by our loan, debt and security agreements;
changes to our credit ratings; our inability to identify sufficient investment opportunities and complete
transactions; the growth of our portfolio and our inability to realize the expected benefits of our
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December 31, 2017
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transactions or acquisitions; our inability to develop greenfield projects or find new sites suitable for the
development of greenfield projects; delays, cost overruns and other problems associated with the
construction and operation of generating facilities and risks associated with the arrangements we enter
into with communities and joint venture partners; Brookfield Asset Management’s election not to source
acquisition opportunities for us and our lack of access to all renewable power acquisitions that Brookfield
Asset Management identifies; we do not have control over all our operations or investments; foreign laws
or regulation to which we become subject as a result of future acquisitions in new markets; changes to
government policies that provide incentives for renewable energy; a decline in the value of our
investments in securities, including publicly traded securities of other companies; we are not subject to
the same disclosure requirements as a U.S. domestic issuer; the separation of economic interest from
control within our organizational structure; 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; our dependence on
Brookfield Asset Management and Brookfield Asset Management’s significant influence over us; the
departure of some or all of Brookfield Asset Management’s key professionals; changes in how Brookfield
Asset Management elects to hold its ownership interests in Brookfield Renewable; and Brookfield Asset
Management acting in a way that is not in the best interests of Brookfield Renewable or our unitholders.
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 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 Unit used by other
entities. In particular, our definition of Funds From Operations and Adjusted Funds From Operations may
differ from the definition of funds from operations used by other organizations, as well as the definition of
funds from operations used by the Real Property Association of Canada 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 believe that Adjusted EBITDA, Funds From Operations, Adjusted Funds
From Operations and Funds From Operations per 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 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 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 6 - Segmented
information in the audited annual consolidated financial statements.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 82
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, 2018
Wyatt Hartley
Chief Financial Officer
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 83
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of Brookfield Renewable Partners Limited (General Partner of Brookfield
Renewable Partners L.P.) and Partners of Brookfield Renewable Partners L.P.
Opinion on the Consolidated Financial Statements
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, 2017 and December 31, 2016, the 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, 2017, and the related notes, comprising a summary of significant accounting policies and other
explanatory information (collectively referred to as the “consolidated financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the
consolidated financial position of Brookfield Renewable as at December 31, 2017 and December 31,
2016, and its consolidated financial performance and its consolidated cash flows for each of the years in
the three-year period ended December 31, 2017, in accordance with International Financial Reporting
Standards (IFRSs) as issued by the International Accounting Standards Board.
Report on internal control over financial reporting
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States) (“PCAOB”), Brookfield Renewable’s internal control over financial reporting as of
December 31, 2017, based on the criteria established in Internal Control – Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our
report dated February 28, 2018 expressed an unqualified opinion on the effectiveness of Brookfield
Renewable’s internal control over financial reporting.
Basis for Opinion
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with International Financial Reporting Standards (IFRSs) 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 PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free from material
misstatement, whether due to error or fraud. Those standards also require that we comply with ethical
requirements, including independence. We are required to be independent with respect to Brookfield
Renewable in accordance with the ethical requirements that are relevant to our audit of the consolidated
financial statements in Canada, the U.S. federal securities laws and the applicable rules and regulations
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 84
of the Securities and Exchange Commission and the PCAOB. We are a public accounting firm registered
with the PCAOB.
An audit includes performing procedures to assess the risks of material misstatements of the
consolidated financial statements, whether due to error or fraud, and performing procedures to respond to
those risks. Such procedures included obtaining and examining, on a test basis, audit evidence regarding
the amounts and disclosures in the consolidated financial statements. The procedures selected depend
on our 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, we consider
internal control relevant to Brookfield Renewable’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 and principles 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 reasonable basis for our audit opinion.
We have served as Brookfield Renewable’s auditors since 2011.
Toronto, Canada
February 28, 2018
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 85
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, 2017, based on the criteria set forth in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based
on this assessment, management concludes that, as of December 31, 2017, 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 16 MW Shantavny wind
project in Northern Ireland and TerraForm Global, Inc. acquired in 2017, whose total assets, net assets
on a combined basis constitute approximately 7% and 5%, respectively, of the consolidated financial
statement amounts as of December 31, 2017 and nil% of revenues and net income, for the year then
ended.
Brookfield Renewable’s internal control over financial reporting as of December 31, 2017, 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, 2017. 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, 2017.
Sachin Shah
Chief Executive Officer
Wyatt Hartley
Chief Financial Officer
February 28, 2018
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 86
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of Brookfield Renewable Partners Limited (General Partner of Brookfield
Renewable Partners L.P.) and Partners of Brookfield Renewable Partners L.P.
Opinion on Internal Control over Financial Reporting
We have audited Brookfield Renewable Partners L.P. (“Brookfield Renewable”)’s internal control over
financial reporting as of December 31, 2017, based on criteria established in Internal Control—Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(the “COSO criteria”). In our opinion, Brookfield Renewable maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2017, based on the COSO criteria.
As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting,
management’s assessment of and conclusion on the effectiveness of internal control over financial
reporting did not include the internal controls of the 16 MW Shantavny wind project in Northern Ireland
and TerraForm Global acquired in 2017, which are included in the 2017 consolidated financial statements
of Brookfield Renewable and constituted approximately 7% and 5% of total and net assets, respectively,
as of December 31, 2017 and nil% of revenues and net income for the year then ended. Our audit of
internal control over financial reporting of Brookfield Renewable also did not include an evaluation of the
internal control over financial reporting of the 16 MW Shantavny wind project in Northern Ireland and
TerraForm Global acquired in 2017.
We also have audited, in accordance with Canadian generally accepted auditing standards and the
standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the 2017
consolidated financial statements of Brookfield Renewable and our report dated February 28, 2018
expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
Brookfield Renewable’s management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting included in
the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility
is to express an opinion on Brookfield Renewable’s internal control over financial reporting based on our
audit. We are a public accounting firm registered with the PCAOB and are required to be independent
with respect to Brookfield Renewable in accordance with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Canada, the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 87
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with 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 its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Toronto, Canada
February 28, 2018
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 88
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
Depreciation
Other
Income tax (expense) 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
27
7
8
27
13
19
5
12
9
11
11
14
14
14
14
15
16
2017
$ 2,625
2016
$ 2,452
2015
$ 1,628
47
(978)
(82)
(632)
2
(33)
(782)
(28)
(39)
(49)
(88)
51
64
(1,038)
(62)
(606)
-
(4)
(781)
(38)
(44)
97
53
40
$
122
(552)
(48)
(429)
10
(9)
(616)
(63)
(18)
78
60
$
103
$
$
53
$
65
$
69
(1)
-
(23)
26
28
(32)
51
(0.18)
$
$
(29)
25
15
(36)
40
(0.23)
$
$
-
1
30
1
2
$
$
103
0.01
The accompanying notes are an integral part of these consolidated financial statements.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 89
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
Revaluations of property, plant and equipment
related to equity-accounted investments
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
Gains arising during the year on financial
instruments designated as cash-flow hedges
Unrealized (loss) gain on available-for-sale securities
Reclassification adjustments for amounts
recognized in net income
Foreign currency translation
Unrealized (loss) gain on foreign exchange 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
Notes
2017
2016
$
51 $
40 $
2015
103
12
19
29
11
5
5
5
10
5
11
872
417
1,197
54
(2)
338
1,262
4
(22)
(1)
190
(94)
11
88
7
(2)
(34)
388
8
61
(41)
986
(66)
(7)
941
1,350
1,329
$
1,401 $
1,369 $
96
5
(283)
1,015
10
-
(32)
(1,138)
55
(8)
(1,113)
(98)
5
14
$
436 $
700 $
273
14
14
14
15
16
8
6
(2)
370
65
28
275
41
15
494
1,401 $
332
1,369 $
$
(86)
(87)
1
(94)
5
The accompanying notes are an integral part of these consolidated financial statements.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 90
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
2017
2016
20
21
22
5
27
5
19
12
17
11
23
24
5
27
13
5
13
11
25
14
14
14
14
15
16
$
$
$
$
$
$
$
799
181
554
72
60
1,666
113
721
27,096
901
177
230
30,904
542
184
112
1,676
2,514
86
10,090
3,588
344
16,622
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
6,298
5,589
58
55
2,843
616
511
3,956
14,282
30,904
$
2,680
576
324
3,448
12,672
27,737
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, 2017
Page 91
BROOKFIELD RENEWABLE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Accumulated other comprehensive income (loss)
Non-controlling interests
Limited
partners'
Foreign
currency Revaluation
surplus
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
Participating
non-controlling
interests - in
operating
subsidiaries
$ (257) $ (404) $ 4,124 $
-
26
-
508
(32)
-
(8) $
-
(1)
(31) $
-
2
24 $ 3,448 $ 324 $ 576 $
-
(9)
(32)
526
28
-
26
39
5,589 $
53
383
55 $
(1)
9
Total
equity
2,680 $ 12,672
51
1,350
(23)
393
General
partnership
Participating
non-controlling
interests - in a
interest in holding subsidiary
- Redeemable
a holding
/Exchangeable
subsidiary
units held by
held by
Brookfield
Brookfield
-
-
-
-
-
411
(63)
-
-
(328)
10
-
(2)
-
-
-
-
-
26
$ (259) $ (378) $ 4,616 $
-
-
-
-
(16)
492
$ (485) $ (670) $ 4,019 $
-
241
-
-
105
-
(36)
-
-
657
(85)
-
-
(281)
9
(24)
(12)
228
-
-
-
-
-
-
25
-
266
$ (257) $ (404) $ 4,124 $
-
-
-
-
-
-
-
-
105
411
(63)
-
-
(328)
10
(16)
508
-
-
-
-
-
(9)
15 $ 3,956 $ 511 $ 616 $
187
-
-
-
(28)
-
-
187
-
-
-
-
(26)
-
1
40
- $ 2,827 $ 128 $ 610 $
-
24
-
(36)
368
-
25
16
(49)
15
-
49
657
(85)
-
-
(281)
9
1
(12)
621
-
-
-
-
-
-
-
-
24
24 $ 3,448 $ 324 $ 576 $
147
-
-
-
(15)
-
-
-
196
-
-
-
-
(25)
-
-
(1)
(34)
-
-
294
525
(539)
-
(7)
709
6,298 $
2,587 $
65
635
-
-
-
2,621
1,417
(119)
-
(1,617)
-
3,002
5,589 $
-
1
-
-
(35)
-
29
3
58 $
52 $
-
6
-
-
2
-
-
(24)
-
-
19
3
55 $
-
62
-
-
(243)
-
(26)
163
598
-
294
525
(1,199)
10
(19)
1,610
2,843 $ 14,282
2,559 $
(29)
304
-
8,763
40
1,329
-
-
83
-
-
(232)
-
-
(5)
121
804
-
2,621
1,417
(696)
9
(1,616)
1
3,909
2,680 $ 12,672
-
-
-
-
-
(1)
(9) $
(7) $
-
(1)
-
-
-
-
-
-
-
-
-
(1)
(8) $
-
-
-
-
-
2
(29) $
(30) $
-
(1)
-
-
-
-
-
-
-
-
-
(1)
(31) $
YEAR ENDED DECEMBER 31
(MILLIONS)
Balance, as at December 31, 2016
Net (loss) income
Other comprehensive income (loss)
Preferred LP Units and LP Units issued
- (Note 15, 16)
Net proceeds
Adjustment
Capital contributions (Note 14)
Acquisition
Distributions or dividends declared
Distribution reinvestment plan
Other
Change in year
Balance, as at December 31, 2017
Balance, as at December 31, 2015
Net income
Other comprehensive (loss) income
Exchange of preferred shares
Preferred LP Units and LP Units issued
Net proceeds
Adjustment
Capital contributions
Acquisition
Distributions or dividends declared
Distribution reinvestment plan
MTO adjustments
Other
Change in year
Balance, as at December 31, 2016
The accompanying notes are an integral part of these consolidated financial statements.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 92
BROOKFIELD RENEWABLE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Accumulated other comprehensive income
Non-controlling interests
YEAR ENDED DECEMBER 31
(MILLIONS)
Balance, as at December 31, 2014
Net income
Other comprehensive (loss) income
Preferred LP Units issued
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
translation
Actuarial
losses on
defined
benefit Cash flow
hedges
plans
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
$ (241) $ (241) $ 3,685 $
-
(429)
-
-
334
-
2
-
-
(9)
-
(239)
5
(3)
(244)
-
-
-
-
-
(429)
$ (485) $ (670) $ 4,019 $
-
-
-
-
-
334
(9) $
-
2
-
-
-
-
-
-
2
(7) $
(27) $ 3,167 $
-
(3)
-
-
-
-
-
-
(3)
2
(96)
-
(9)
-
(239)
5
(3)
(340)
- $ 728 $
1
-
128
30
(117)
-
-
-
(1)
-
-
128
(1)
-
(30)
-
-
(118)
(30) $ 2,827 $ 128 $ 610 $
2,062 $
69
204
-
-
460
(208)
-
-
525
2,587 $
59 $
-
(2)
-
-
-
(12)
-
7
(7)
52 $
2,865 $
1
(87)
-
-
-
(217)
-
(3)
(306)
2,559 $
Total
equity
8,881
103
(98)
128
(10)
460
(707)
5
1
(118)
8,763
The accompanying notes are an integral part of these consolidated financial statements.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 93
BROOKFIELD RENEWABLE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31
(MILLIONS)
Operating activities
Net income
Adjustments for the following non-cash items:
Depreciation
Unrealized financial instrument loss
Share of earnings from
equity-accounted investments
Deferred income tax expense (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
Acquisitions of equity-accounted investments
Cash and cash equivalents in acquired entity
Investment in:
Sustaining capital expenditures
Development and construction of renewable power
generating assets
Capital distribution received from equity-accounted investments, net
Proceeds from disposal of assets
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
2017
2016
2015
$
51 $
40 $
103
12
5
11
7
13
13
14
14
15
16
14
15
14, 16
3
3
3
12
12
4
5
782
33
(2)
49
-
4
31
5
(25)
928
1,874
(1,607)
294
(5)
187
411
-
(539)
(25)
(26)
(591)
(27)
(234)
(439)
611
(138)
(217)
-
150
(77)
16
(328)
3
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
(118)
(251)
-
-
(60)
7
(3,191)
10
576
223
799 $
611 $
27 $
48 $
160
63
223 $
588 $
40 $
55 $
$
$
$
$
616
9
(10)
(78)
(53)
62
19
(18)
(62)
588
944
(855)
460
-
128
-
(10)
(208)
(31)
-
(461)
(33)
(682)
-
19
(94)
(191)
144
143
(18)
56
(623)
(19)
(87)
150
63
414
18
32
The accompanying notes are an integral part of these consolidated financial statements.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 94
BROOKFIELD RENEWABLE PARTNERS L.P.
NOTES TO THE ANNUAL 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, Europe, and other countries (including
India and China).
Renewable’s Class A Series 5, Series 7, Series
9, Series 11 and Series 13 preferred limited
partners’ equity are traded under the symbols
“BEP.PR.E”,
“BEP.PR.I”,
“BEP.PR.G”,
“BEP.PR.K” and “BEP.PR.M” respectively, on
the Toronto Stock Exchange.
the context
indicates or
requires
Unless
otherwise,
term “Brookfield Renewable”
means Brookfield Renewable Partners L.P. and
its controlled entities.
the
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
Asset
Management
Management”). Brookfield Asset Management
and
than Brookfield
Renewable, are also individually and collectively
referred to as “Brookfield” in these financial
statements.
its subsidiaries, other
(“Brookfield
Inc.
Brookfield Renewable’s non-voting
limited
partnership units (“LP Units”) are traded under
the symbol “BEP” on the New York Stock
Exchange and under the symbol “BEP.UN” on
the Toronto Stock Exchange. Brookfield
Notes to consolidated financial statements
GENERAL APPLICATION
1. Basis of preparation and significant accounting
policies
2. Principal subsidiaries
3. Acquisitions
4. Disposal of assets
5. Risk management and financial instruments
6. Segmented information
CONSOLIDATED RESULTS OF OPERATIONS
7. Other income
8. Direct operating costs
9. Other
10. Foreign currency translation
11.
Income taxes
CONSOLIDATED FINANCIAL POSITION
12. Property, plant and equipment, at fair value
13. Long-term debt and credit facilities
14. Non-controlling interests
15. Preferred limited partner’s equity
16. Limited partners’ equity
17. Goodwill
18. Capital management
19. Equity-accounted investments
20. Cash and cash equivalents
21. Restricted cash
22. Trade receivables and other current assets
23. Other long-term assets
24. Accounts payable and accrued liabilities
25. Other long-term liabilities
26. Commitments, contingencies and guarantees
OTHER
27. Related party transactions
28. Supplemental information
29. Pension and employee future benefits
30. Subsidiary public issuers
31. Subsequent events
Page
96
110
111
116
117
126
132
132
133
133
134
136
139
142
147
147
148
148
149
150
151
151
151
152
152
153
154
158
158
162
163
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 95
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, 2017, which encompass individual IFRS, International Accounting Standards (“IAS”), and
interpretations made by the International Financial Reporting Interpretations Committee (“IFRIC”) and the
Standard Interpretations Committee (“SIC”). The policies set out below are consistently applied to all
periods presented, unless otherwise noted.
These consolidated financial statements have been authorized for issuance by the Board of Directors of
its general partner, BRPL, on February 28, 2018.
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 pounds 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 renewable power generating operations in the
United States, Brazil, Europe and other countries (including India and China). Brookfield Renewable has
also entered into a voting agreement with our consortium partners in respect of our Colombian
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 96
operations. These voting agreements provide Brookfield Renewable the authority to direct the election of
the Boards of Directors of the relevant entities, among other things, and therefore provide Brookfield
Renewable with control. Accordingly, Brookfield Renewable consolidates the accounts of these entities.
Refer to Note 27 - Related party transactions for further information.
For entities previously controlled by Brookfield Asset Management, the voting agreements entered into do
not represent business combinations in accordance with IFRS 3, Business Combinations (“IFRS 3”), as
all combining businesses are ultimately controlled by Brookfield 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
Equity-accounted investments are entities over which Brookfield Renewable has significant influence or
joint arrangements representing joint ventures. Significant influence is the ability to participate in the
financial and operating policy decisions of the investee, but without controlling or jointly controlling those
investees. Such investments are accounted for using the equity method.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities
require unanimous consent of the parties sharing control. Brookfield Renewable accounts for its interests
in joint ventures using the equity method.
Under the equity method, the carrying value of an interest in an investee is initially recognized at cost and
adjusted for Brookfield Renewable’s share of net income, other comprehensive income (“OCI”),
distributions by the equity-accounted investment and other adjustments to Brookfield Renewable’s
proportionate interest in the investee.
(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, 2017
Page 97
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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 98
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
Solar 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 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, 2017
is 15 years (2016: 15 years). Since land rights are part of the concession or authorization, this cost is also
subject to depreciation.
Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount
of the asset, and the net amount is applied to the revalued amount of the asset.
Gains and losses on disposal of an item of property, plant and equipment are recognized in Other income
in the consolidated statements of income. 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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 99
(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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 100
(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
Brookfield Renewable maintains a portfolio of marketable securities comprised of liquid equity and debt
securities 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 is derived from the sale of electricity and is recorded at the time power is provided based upon
the output delivered and capacity provided at rates specified under either contract terms or prevailing
market rates. 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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 101
(l) Business combinations
The acquisition of a business is accounted for using the acquisition method. The consideration for an
acquisition is measured at the aggregate of the fair values, at the date of exchange, of the assets
transferred, the liabilities incurred to former owners of the acquired business, and equity instruments
issued by the acquirer in exchange for control of the acquired business. The acquired business’
identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS
3 are recognized at their fair values at the acquisition date, except for income taxes which are measured
in accordance with IAS 12, Income Taxes, share-based payments which are measured in accordance
with IFRS 2, Share-based Payment and non-current assets that are classified as held-for-sale which are
measured at fair value less costs to sell in accordance with IFRS 5, 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
(i) Capitalized costs
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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 102
(ii) Pension and employee future benefits
Pension and employee future benefits are recognized in the consolidated financial statements in respect
of employees of the operating entities within Brookfield Renewable. The costs of retirement benefits for
defined benefit plans and post-employment benefits are recognized as the benefits are earned by
employees. The 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.
(iv) Interest and borrowing costs
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.
(vi) Interest income
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
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 103
has complied with the conditions and that there is reasonable assurance the grants will be received will
be undertaken on a case by case basis. Brookfield Renewable reduces the cost of the asset by the
amount of the grant. The grant amounts are recognized in income on a systematic basis as a reduction
of depreciation over the periods, and in the proportions, in which depreciation on those assets is charged.
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:
(i) Property, plant and equipment
The fair value of Brookfield Renewable’s property, plant and equipment is calculated using estimates and
assumptions about future electricity prices from renewable sources, anticipated long-term average
generation, estimated operating and capital expenditures, future inflation rates and discount rates, as
described in Note 12 - Property, plant and equipment, at fair value. 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.
(ii) Financial instruments
Brookfield Renewable makes estimates and assumptions that affect the carrying value of its financial
instruments, including estimates and assumptions about future electricity prices, long-term average
generation, capacity prices, discount rates and the timing of energy delivery. Non-financial instruments
are valued using estimates of future electricity prices which are estimated by considering broker quotes
for the years in which there is a liquid market and, for the subsequent years, Brookfield Renewable’s best
estimate of electricity prices that would allow new entrants into the market. The fair value of interest rate
swaps is the estimated amount that another party would receive or pay to terminate the swap agreements
at the reporting date, taking into account current market interest rates. This valuation technique
approximates the net present value of future cash flows. See Note 5 - Risk management and financial
instruments for more details.
(iii) Deferred income taxes
The consolidated financial statements include estimates and assumptions for determining the future tax
rates applicable to subsidiaries and identifying the temporary differences that relate to each subsidiary.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply during
the year when the assets are realized or the liabilities settled, using the tax rates and laws enacted or
substantively enacted at the consolidated statement of financial position dates. Operating plans and
forecasts are used to estimate when the temporary difference will reverse.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 104
(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:
(i) Preparation of consolidated financial statements
These consolidated financial statements present the financial position, results of operations and cash
flows of Brookfield Renewable. Judgment is required in determining what assets, liabilities and
transactions are recognized in the consolidated financial statements as pertaining to Brookfield
Renewable’s operations.
(ii) Common control transactions
Common control business combinations specifically fall outside of scope of IFRS 3 and as such
management has used its judgment to determine an appropriate policy to account for these transactions,
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. 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 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 2025 in North America and Colombia, 2023 in Europe,
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 105
and 2021 in Brazil. Based on current supply and demand fundamentals, Brookfield Renewable revised
the year of new entry in North America to 2025 from 2023. The year of new entry is viewed as the point
when generators must build additional capacity to maintain system reliability and provide an adequate
level of reserve generation with the retirement of older coal fired plants and rising environmental
compliance costs in North America and Europe, and overall increasing demand in Colombia and Brazil.
For the North American and European businesses, Brookfield Renewable has estimated a discount to
these new-build wind prices to determine renewable electricity prices for hydroelectric and wind facilities.
In Brazil and Colombia, the estimate of future electricity prices is based on a similar approach as applied
in North America using a forecast of the all-in cost of development.
Terminal values are included in the valuation of hydroelectric assets in North America and Colombia. For
the hydroelectric assets in Brazil, cash flows have been included based on the duration of the
authorization or useful life of a concession asset 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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 106
(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
In July 2014,
the IASB
issued the final
version of IFRS
9, Financial
Instruments
(“IFRS 9”).
Description
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.
Effective date Effect on financial statements
The standard
has a
mandatory
effective date
for annual
periods
beginning on or
after January 1,
2018, with early
adoption
permitted.
The adoption of IFRS 9 is a
significant initiative for Brookfield
Renewable.
Management has chosen to adopt
the standard retrospectively with no
restatement of comparative periods.
The assessment of financial assets
and liabilities under the new
classification methodology has been
completed. Hedging documentation
has been updated for compliance
with IFRS 9 and updated risk
management policies and internal
controls to align with the new
standard. Management has also
assessed the impact of the new
impairment requirements for financial
assets.
There are no material adjustments
from the adoption of the standard.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 107
Standard
IFRS 15,
Revenue from
Contracts with
Customers
(“IFRS 15”)
was issued by
the IASB on
May 28, 2014.
Description
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.
Effective date Effect on financial statements
The standard
has a
mandatory
effective date
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.
Management has chosen to adopt
the standard using the modified
retrospective approach. This method
results in a cumulative catch-up
adjustment to equity as of January 1,
2018 as if the standard had always
been in effect.
Management has completed its
review of material revenue streams.
The majority of Brookfield
Renewable’s revenue streams are
within the scope of IFRS 15 and are
include the sale of energy, capacity
and renewable energy credits
through power purchase agreements
or through merchant mechanisms.
Based on management’s analysis,
substantially all of the contracts
currently in place for the year
beginning on January 1, 2018 do not
contain a difference in the timing or
measurement of revenue recognition
under the new standard and the
impact of both the cumulative catch
up and ongoing revenue recognition
is expected to not be material to the
overall statements of Brookfield
Renewable.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 108
Standard
IFRS 16,
Leases (“IFRS
16”) was
issued by the
IASB on
January 13,
2016.
Management has formed its adoption
working group and participated in
planning sessions with Brookfield
Asset Management.
Management continues to evaluate
the impact of IFRS 16 on the
consolidated financial statements.
Effective date Effect on financial statements
The standard
has a
mandatory
effective date
for annual
periods
beginning on or
after January 1,
2019, with early
adoption
permitted.
Description
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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 109
2. PRINCIPAL SUBSIDIARIES
The following table lists the subsidiaries of Brookfield Renewable which, in the opinion of management,
significantly affect its financial position and results of operations as at December 31, 2017:
Alta Wind VIII LLC(1)
BIF II Safe Harbor Holdings LLC(1)
BIF III Holtwood LLC(1)
BRE GLBL Holdings L.P.(1)
BRI Green Energy Limited(1)
Brookfield BRP Canada Corp.
Brookfield Energia Comercializadora Ltda
Brookfield Power US Holding America Co.
Brookfield Power Wind Prince LP
Brookfield Renewable UK Hydro Limited
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.
Kwagis Power Limited Partnership
Lièvre Power L.P.
Mississagi Power Trust
Orion Canadian Holdings 1 AIV L.P.
PEA - Parque Eólico da Serra, Unipessola S.A.(1)
Powell River Energy Inc.
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
Bermuda
Republic of Ireland
Alberta
Brazil
Delaware
Ontario
England and Wales
Delaware
Delaware
Louisiana
Delaware
Delaware
Delaware
Ontario
Delaware
Colombia
Brazil
British Columbia
Québec
Québec
Ontario
Portugal
Canada
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
99.5
100
75
100
100
100
100
100
100
100
100
100
100
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 110
3. ACQUISITIONS
The following investments were accounted for using the equity method as Brookfield Renewable has
significant influence through its position in the business, and the results of operations have been included
in the audited annual consolidated financial statements since the date of investment. See Note 19 –
Equity-accounted investments.
European Storage
In August 2017, Brookfield Renewable, along with its institutional partners, acquired a 25% interest in
FHH Guernsey Ltd which owns a 2.1 GW pumped storage portfolio in the United Kingdom (“European
Storage”). Brookfield Renewable retains an approximate 7% economic interest in the portfolio. Total
consideration was £194 million ($248 million). The acquisition costs of £1 million ($1 million) were
incurred and capitalized.
TerraForm Power
In October 2017, along with its institutional partners, Brookfield Renewable closed the acquisition of a
51% interest in TerraForm Power, Inc. (“TerraForm Power”). TerraForm Power is a 2,600 MW large scale
diversified portfolio of solar and wind assets located predominately in the U.S. Brookfield Renewable
retains an indirect economic interest of approximately 16% in TerraForm Power for a total net investment
of $203 million.
Brookfield Renewable had previously accounted for its indirect interest in TerraForm Power as an
available for sale investment. The change from available for sale accounting to equity method accounting
resulted in a gain of $13 million being reclassified from the audited annual consolidated statement of
comprehensive income to the statement of income and included in Other income, representing the
accumulated gain on the previously held indirect investment. The acquisition costs of $1 million were
incurred and capitalized.
In October 2017, Brookfield Renewable entered into a voting agreement with the Brookfield subsidiary
that ultimately controls TerraForm Power. Pursuant to this voting agreement, Brookfield Renewable is
entitled to direct the election for one of the four directors of the Brookfield subsidiary, thereby providing
Brookfield Renewable with significant influence over this subsidiary.
The following investments were accounted for using the acquisition method, and the results of operations
have been included in the audited annual consolidated financial statements since the date of acquisition.
European Wind
In February 2017, Brookfield Renewable entered into an agreement to acquire, along with its institutional
partners, a 100% interest in a 16 MW wind facility in Northern Ireland (“European Wind”).
In August 2017, Brookfield Renewable, along with its institutional partners, completed the acquisition of
European Wind, which was commissioned in July of 2017. Accordingly, if the acquisition had taken place
at the beginning of the year, the revenue from European Wind earned prior to the date of acquisition
would have been immaterial. The total consideration was £24 million ($32 million). Brookfield Renewable
retains an approximate 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.
TerraForm Global
In December 2017, along with its institutional partners, Brookfield Renewable closed the acquisition of a
100% interest in TerraForm Global, Inc. (“TerraForm Global”). TerraForm Global is 919 MW portfolio of
diversified solar and wind assets located predominately in Brazil and Asia. The total consideration paid
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 111
was $657 million and the fair value of the interest previously held was $100 million. Brookfield Renewable
retains a 31% economic interest in TerraForm Global with its share of the fair value of previously held
interest on the acquisition date totaling $30 million. Brookfield Renewable’s share of the consideration
paid was $202 million.
Brookfield Renewable had previously accounted for its indirect interest in TerraForm Global as an
available for sale investment. The change from available for sale accounting to consolidation accounting
resulted in a gain of $2 million being reclassified from the audited annual consolidated statement of
comprehensive income to the statement of income and included in Other income, representing the
accumulated gain on the previously held indirect investment.
If the acquisition had taken place at the beginning of the year, the revenue from TerraForm Global for the
year ended December 31, 2017 would have been $250 million. The total acquisition costs of $1 million
were expensed as incurred and have been classified under Other in the audited annual consolidated
statements of income.
In December 2017, Brookfield Renewable entered into a voting agreement with an affiliate of Brookfield
Renewable that ultimately controls TerraForm Global. Pursuant to this voting agreement, Brookfield
Renewable is entitled to direct the election of the directors of the Brookfield subsidiary.
The provisional purchase price allocations, at fair value, with respect to the acquisitions are as follows:
(MILLIONS)
Cash and cash equivalents
Restricted cash
Trade receivables and other current assets
Financial instruments
Property, plant and equipment, at fair value
Deferred tax assets
Other long-term assets
Current liabilities
Current portion of long-term debt
Financial instruments
Long-term debt
Deferred income tax liabilities
Other long-term liabilities
Non-controlling interests
Fair value of net assets acquired
TerraForm European
Global
Wind
$
611 $
- $
90
62
20
1,208
18
94
(73)
(1,183)
(15)
(5)
(15)
(54)
(1)
757
-
1
-
37
-
-
(4)
-
-
-
(2)
-
-
32
Total
611
90
63
20
1,245
18
94
(77)
(1,183)
(15)
(5)
(17)
(54)
(1)
789
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 112
Completed in 2016
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
On January 22, 2016, Brookfield Renewable and its institutional partners (the “consortium”) acquired a
57.6% interest in Isagen S.A. E.S.P (“Isagen”) from the Colombian government (the “Initial Investment”).
Isagen was a listed entity in Colombia. It 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.
Following the closing of the Initial Investment, the consortium was required to conduct two mandatory
tender offers (“MTOs”) for the Isagen public shareholders at the same price per share paid for its initial
57.6% controlling interest.
The consortium closed the First MTO and the Second MTO on May 13, 2016 and September 14, 2016,
respectively. During 2017, the consortium acquired further shares from public shareholders and
completed delisting of Isagen from the Colombia Stock Exchange. After giving effect to the MTOs and
additional shares the consortium ownership stands at 99.5% as of December 31, 2017.
Brookfield Renewable is the general partner of and controls the entity that holds the consortium’s 99.5%
interest in Isagen. Brookfield Renewable’s investment is equivalent to an approximate 24% economic
interest.
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 in 2016.
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 classified under Other in
the audited annual consolidated statements of income in 2016.
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 retains approximately 28.6% interest
in the portfolio.
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 in 2016.
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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 113
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
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
Final purchase price allocations, at fair values, with respect to the acquisitions are as follows:
(MILLIONS)
Colombia
Brazil Pennsylvania
Ireland
Cash and cash equivalents
$
113 $
4 $
- $
- $
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 17)
Purchase price
Completed in 2015
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 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.
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
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 114
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 in 2015 with institutional partners, and Brookfield Renewable retains an
approximate 40% controlling interest.
Total consideration of R$1,867 million ($588 million) included cash paid of R$1,717 million ($541 million)
and deferred consideration. The remaining non-controlling interests were subsequently acquired for R$50
million ($16 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.
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
Brazil Portugal Scotland
Total
$
19 $
- $
- $
16
16
854
(21)
(280)
-
(16)
5
3
209
(19)
(111)
(16)
-
-
1
84
(1)
-
(12)
-
$
588 $
71 $
72 $
19
21
20
1,147
(41)
(391)
(28)
(16)
731
During the years ended December 31, 2017 and 2016, the purchase price allocations for the acquisitions
in 2016 and 2015, respectively, were finalized. No material changes to the provisional purchase price
allocations disclosed in the audited annual consolidated financial statements for 2016 and 2015 had to be
considered for acquisitions made in the respective years.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 115
4. DISPOSAL OF ASSETS
In March 2017, along with its institutional partners, Brookfield Renewable sold its interest in two wind
facilities in Ireland, with a combined capacity of 137 MW, to a third party. Gross cash consideration
consisted of €147 million ($155 million), inclusive of working capital adjustments. The resulting loss on
disposition of €5 million ($5 million), net of €5 million ($5 million) of transaction costs, was recognized in
the audited annual consolidated statements of income within Other. Brookfield Renewable’s interest was
approximately 40%.
As a result of the disposition, the post-tax accumulated revaluation surplus of €44 million ($47 million)
was reclassified from other comprehensive income directly to equity. Further, other comprehensive loss of
€3 million ($3 million) post-tax on interest rate swaps which had been designated as hedges was
reclassified to the audited annual consolidated statements of income.
Summarized financial information relating to the disposal of the facilities is shown below:
(MILLIONS)
Net proceeds, including working capital adjustments and transaction costs
Carrying value
Assets
Liabilities
Loss on disposal
$
$
150
353
(198)
155
(5)
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 116
5. 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 fully reflect Brookfield
Renewable’s risk exposure.
(a) Market risk
Market risk is defined for these purposes as the risk that the fair value or future cash flows of a financial
instrument held by Brookfield Renewable will fluctuate because of changes in market prices.
Brookfield Renewable faces market risk from foreign currency assets and liabilities, the impact of changes
in interest rates, and floating rate liabilities. Market risk is managed by funding assets with financial
liabilities in the same currency and with similar interest rate characteristics and holding financial contracts,
such as interest rate swaps and foreign exchange contracts, to minimize residual exposures. Financial
instruments held by Brookfield Renewable that are subject to market risk include borrowings and financial
instruments, such as interest rate, currency and commodity contracts. The categories of financial
instruments that can give rise to significant variability are described below:
(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)
Effect on OCI(1)
2017
2016
2015
2017
2016
2015
$
(3) $
(1) $
(2) $
(4) $
(7) $
(7)
7
5% decrease
(1) Amounts represent the potential annual net pretax impact.
3
1
2
4
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,
Colombian peso, Indian rupee, South African rand, Malaysian ringgit, Thai baht and Chinese yuan
through its investments in foreign operations. Consequently, fluctuations in the U.S. dollar exchange rate
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 117
against these currencies increase the volatility of net income and other comprehensive income. Brookfield
Renewable holds foreign currency contracts primarily to mitigate this exposure.
The table below summarizes the impact of changes in the exchange rate as at December 31. The impact
is expressed in terms of the effect on income and OCI. The sensitivities are based on the assumption that
the currency exchange rate changes by five percent with all other variables held constant.
Impact of a 5% change in U.S. dollar exchange rates, on outstanding foreign exchange swaps, for the
year ended December 31:
(MILLIONS)
5% increase
Effect on net income(1)
2017
2016
Effect on OCI(1)
2015
2017
2016
$
4 $
1 $
2 $
79 $
51 $
5% decrease
(1) Amounts represent the potential annual net pretax impact.
(4)
(1)
(2)
(79)
(51)
2015
10
(10)
(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 $4,176
million (2016: $4,194 million). Of this principal value, $824 million (2016: $966 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)
Effect on OCI(1)
2017
2016
2015
2017
2016
$
17 $
(17) $
(15) $
54 $
115 $
1% decrease
(1) Amounts represent the potential annual net pretax impact.
(17)
17
15
(54)
(115)
2015
125
(125)
(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, 2017
Page 118
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 22 - Trade receivables and other current assets, for
additional details regarding Brookfield Renewable’s trade receivables balance.
The maximum credit exposure at December 31 was as follows:
(MILLIONS)
Cash and cash equivalents
Restricted cash(1)
Trade receivables and other short-term receivables
Financial instrument assets(1)
Due from related parties
(1)
Includes both the current and long-term amounts.
(c) Liquidity risk
$
2017
799
284
442
185
60
$
2016
223
250
365
200
54
$
1,770
$
1,092
Liquidity risk is the risk that Brookfield Renewable cannot meet a demand for cash or fund an obligation
when due. Liquidity risk is mitigated by Brookfield Renewable’s cash and cash equivalent balances and
its access to undrawn credit facilities. Details of the available portion of credit facilities are included in
Note 13 – 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, 2017
Page 119
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, 2017
(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, 2016
(MILLIONS)
Accounts payable and accrued liabilities
Financial instrument liabilities(1)
Due to related parties
184
112
1
1,676
634
< 1 year 2-5 years
> 5 years
$
542 $
- $
- $
62
-
3
24
-
10
Total
542
270
112
14
4,587
1,924
5,579
1,697
11,842
4,255
$
3,149 $
6,576 $
7,310 $ 17,035
< 1 year 2-5 years
> 5 years
$
467 $
- $
- $
156
76
66
-
6
-
Total
467
228
76
Other long-term liabilities - concession payments
Long-term debt and credit facilities(1)
Interest payable on long-term debt(2)
Total
(1) Includes both the current and long-term amounts.
(2) Represents aggregate interest payable expected to be paid over the entire term of the obligations, if held to maturity. Variable
rate interest payments have been calculated based on estimated interest rates.
6,722 $ 14,906
2,323 $
5,861 $
10,260
1,034
3,859
5,256
1,449
3,970
1,821
589
16
11
1
4
$
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 120
Brookfield Renewable classifies its assets and liabilities as outlined below:
AS AT DECEMBER 31, 2017
(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
$
799 $
Assets/
liabilities(1)
Derivatives
used for
hedging
Other Non-financial
assets and
non-financial
liabilities
financial
assets and
liabilities
- $
- $
- $
181 -
442
-
60
-
-
-
-
-
103
-
-
-
-
20
-
-
-
-
-
-
-
-
-
6
-
-
-
-
-
-
-
-
-
159
-
-
-
-
-
- $
-
-
112
-
-
721
Total
799
181
442
112
60
185
721
27,096
27,096
901
177
127
901
177
230
$ 1,585 $
20 $
- $
6 $
- $
145
125
-
-
-
-
-
-
-
-
159 $ 29,134 $ 30,904
542 $
-
112
11,766
- $
-
-
-
542
270
112
11,766
-
3,588
3,588
344
-
344
- $
-
-
-
-
-
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.
125 $ 12,764 $
145 $
- $
3,588 $ 16,622
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 121
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 $
Assets/
liabilities(1)
Derivatives
used for
hedging
Other Non-financial
assets and
non-financial
liabilities
financial
assets and
liabilities
- $
- $
- $
- $
-
-
-
-
-
-
-
-
-
-
-
-
14
50
136
Total
223
121
365
89
54
200
206
-
-
89
-
-
206
-
-
-
-
-
14 $
- $
11
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,257
25,257
896
150
47
896
150
176
50 $
136 $ 26,645 $ 27,737
- $
467 $
- $
217
-
-
-
-
-
76
10,182
-
-
-
-
3,802
310
-
467
228
76
10,182
3,802
310
121
365
-
54
-
-
-
-
-
129
892 $
- $
-
-
-
-
-
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 $
11 $
- $
3,802 $ 15,065
Fair value disclosures
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
Fair values determined using valuation models require the use of assumptions concerning the amount
and timing of estimated future cash flows and discount rates. In determining those assumptions,
management looks primarily to external readily observable market inputs such as interest rate yield
curves, currency rates, commodity prices and, as applicable, credit spreads.
A fair value measurement of a non-financial asset is the consideration that would be received in an
orderly transaction between market participants, considering the highest and best use of the asset.
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, 2017
Page 122
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(2)
Property, plant and equipment
Liabilities measured at fair value:
Financial instrument liabilities(3)
Energy derivative contracts
Interest rate swaps
Foreign exchange swaps
Contingent consideration(4)
Liabilities for which fair value is disclosed:
Long-term debt and credit facilities
Level 1
Level 2
Level 3
2017
2016
$ 799 $
- $
- $
799 $
-
-
-
-
-
284
-
6
20
159
223
250
8
7
49
136
27,096
27,096
25,257
-
-
-
(18)
(19)
(155)
(96)
(18)
(5)
(178)
(45)
(16)
-
-
6
20
80
-
(19)
(155)
(96)
-
284
-
-
-
79
-
-
-
-
-
-
(12,479)
-
(12,479)
(10,870)
Total
(1)
(2)
(3)
(4) Amount relates to 2015 and 2014 business combinations with obligations lapsing in 2021 and 2024 respectively.
Includes both the current amount and long-term amount included in Other long-term assets.
Includes amounts in Level 2 that relate to the Brookfield Infrastructure Debt Fund holdings.
Includes both current and long-term amounts.
$ 1,162 $ (12,643) $ 27,078 $ 15,597 $ 14,816
There were no transfers between levels during the year ended December 31, 2017.
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
2017
2016
Net Liabilities Net Liabilities
Assets
Liabilities
(Assets)
(Assets)
$
- $
19 $
6
20
159
185
72
155
96
-
270
184
$
113 $
86 $
19
149
76
(159)
85
112
(27)
$
$
(3)
171
(4)
(136)
28
101
(73)
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 123
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
2017
2016
2015
$
28 $
145 $
77
Increases (decreases) in the net financial instrument liability position:
Unrealized loss (gain) through income on energy derivative contracts
Unrealized loss through OCI on energy derivative contracts
Unrealized (gain) loss through income on interest rate swaps
Unrealized (gain) loss through OCI on interest rate swaps
Unrealized loss (gain) 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 loss (gain) through OCI on available-for-sale investments
Acquisitions, settlements and other
(a)
(a)
(b)
(b)
(c)
(c)
(d)
(d)
5
17
(1)
(18)
29
94
-
20
(89)
-
28
7
1
(3)
61
-
(52)
(159)
(2)
3
(2)
20
13
(57)
25
-
68
Balance, end of year
$
85 $
28 $
145
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) $
5 $
3 $
(b)
(c)
107
33
2
6
$
145 $
11 $
-
-
-
-
(a) $
14 $
2 $
(b)
(c)
48
63
176
39
1
178
12
$
125 $
217 $
191
(a) $
- $
(3) $
(b)
(c)
(d)
(1)
(19)
(1)
(10)
(159)
(136)
$ (179) $ (150) $
-
-
(1)
(14)
(15)
(a) $
- $
(5) $
(31)
(b)
(c)
(5)
(1)
(6)
(39)
-
-
$
$
(6) $
(50) $
(31)
85 $
28 $
145
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, 2017
Page 124
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, 2017, gains of $23 million relating to energy derivative contracts were
realized and reclassified from OCI to revenues in the consolidated statements of income (loss) (2016: $48
million and 2015: $32 million).
Based on market prices as of December 31, 2017, unrealized losses of $9 million (2016: $6 million gains
and 2015: $25 million gains) 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, 2017, agreements with a total notional exposure of $1,704 million were outstanding
(2016: $2,397 million) including $780 million (2016: $871 million) associated with agreements that are not
formally designated as hedging instruments. The weighted-average fixed interest rate resulting from
these agreements is 4.5% (2016: 2.5%).
For the year ended December 31, 2017, net movements relating to cash flow hedges realized and
reclassified from OCI to interest expense – borrowings in the consolidated statements of income (loss)
were $20 million losses (2016: $16 million and 2015: $nil).
Based on market prices as of December 31, 2017, unrealized losses of $18 million (2016: $110 million
and 2015: $114 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, 2017, agreements with a total notional exposure of $2,306 million were outstanding
(2016: $1,325 million) including $718 million (2016: $283 million) associated with agreements that are not
formally designated as hedging instruments.
Based on market prices as of December 31, 2017, unrealized losses of $48 million (2016: $1 million and
2015: $12 million) 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 liquid equity and debt
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, 2017, net movements
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 125
relating to available-for-sale securities realized and reclassified from OCI to net income were $2 million
gains (2016: $9 million gains and 2015: $nil).
Unrealized loss through OCI on available-for-sale investments of $20 million relate to the impact of our
acquisition of TerraForm Power.
6. SEGMENTED INFORMATION
Brookfield Renewable’s Chief Executive Officer and Chief Financial Officer (collectively, the chief
operating decision maker or “CODM”) review the results of the business, manage operations, and
allocate resources based on the type of technology.
With effect from the fourth quarter of 2017, operations are segmented by technology – 1) hydroelectric, 2)
wind, 3) solar, storage, and other (Co-gen and biomass), and 4) corporate – with hydroelectric and wind
further segmented by geography (North America, Colombia, Brazil, Europe and Other). To reflect the way
in which the CODM now reviews results, manage operations and allocate resources, following the
investments in European Storage, TerraForm Power and TerraForm Global and as Brookfield Renewable
continues to build out its solar and storage businesses, the CODM has commenced reviewing these
businesses along with its Co-gen and biomass businesses on an aggregate basis. The Colombia
segment aggregates the financial results of its hydroelectric and Co-gen facilities. A pumped storage
facility in North America, that was previously included in the hydroelectric segment, is now included in the
“Solar, storage and other” segment. The corporate segment represents all activity performed above the
individual segments for the business.
In addition, with the effect from the fourth quarter of 2017, the reporting to the CODM such that the
measures utilized by the CODM to assess performance and allocate resources are on a proportionate
basis. Information on a proportionate basis reflects Brookfield Renewable’s share from facilities which it
accounts for using consolidation and the equity method whereby Brookfield Renewable either controls or
exercises significant influence or joint control over the investment, respectively. Proportionate information
provides a Unitholder (holders of the GP interest, Redeemable/Exchangeable partnership units, and LP
Units) perspective that the CODM considers important when performing internal analyses and making
strategic and operating decisions. The CODM also believes that providing proportionate information helps
investors understand the impacts of decisions made by management and financial results allocable to
Brookfield Renewable’s Unitholders.
Proportionate financial information is not, and is not intended to be, presented in accordance with IFRS.
Tables reconciling IFRS data with data presented on a proportionate consolidation basis have been
disclosed. Segment revenues, other income, direct operating costs, interest expense, depreciation,
current and deferred income taxes, and other are items that will differ from results presented in
accordance with IFRS as these items (1) include Brookfield Renewable’s proportionate share of earnings
from equity-accounted investments attributable to each of the above-noted items, and (2) exclude the
proportionate share of earnings (loss) of consolidated investments not held by us apportioned to each of
the above-noted items.
Segmented net income (loss) is not a measure the CODM uses to review the results of business and
allocate resources. Brookfield Renewable does not control those entities that have not been consolidated
and as such, have been presented as equity-accounted investments in its financial statements. The
presentation of the assets and liabilities and revenues and expenses do not represent Brookfield
Renewable’s legal claim to such items, and the removal of financial statement amounts that are
attributable to non-controlling interests does not extinguish Brookfield Renewable’s legal claims or
exposures to such items.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 126
Brookfield Renewable reports its results in accordance with these segments and presents prior period
segmented information in a consistent manner.
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
preparation and significant accounting policies. Brookfield Renewable analyzes the performance of its
operating segments based on revenues, Adjusted EBITDA, and Funds 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, unrealized gain or loss on financial instruments, non-cash gain or loss from equity-accounted
investments, distributions to preferred shareholders and preferred limited partners and other typical non-
recurring items. As compared to the preceding years, Brookfield Renewable revised its definition of
Adjusted EBITDA to include its proportionate share of Adjusted EBITDA from equity-accounted
investments. In preceding years, Brookfield Renewable included its proportionate shares of Funds From
Operations from equity-accounted investments. Brookfield Renewable revised its definition as it believes
it provides a more meaningful measure for investors to evaluate financial and operating performance on
an allocable basis to Unitholders.
Brookfield Renewable uses Funds From Operations to assess the performance of its business and is
defined as Adjusted EBITDA less management service costs, interest and current income taxes, which is
then adjusted for the cash portion of non-controlling interests and distributions to preferred shareholders
and preferred limited partners.
The following segmented information is regularly reported to the CODM.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 127
The following table provides each segment’s results in the format that management organizes its segments to make operating decisions and
assess performance and reconciles Brookfield Renewable’s proportionate results to our consolidated statements of income on a line by line basis
by aggregating the components comprising the earnings from Brookfield Renewable’s investments in associates and reflecting the portion of each
line item attributable to non-controlling interests for the year ended December 31, 2017:
Contribution
Attributable to Unitholders
Wind
Solar, Corporate
Total
from Attributable
equity
accounted
investments
(74)
(11)
28
to non-
controlling
As per
IFRS
interests financials(1)
2,625
47
(978)
1,020
18
(429)
Hydroelectric
North
America
945
1
(281)
Colombia
191
2
(94)
-
665
-
(180)
1
-
-
-
-
486
(222)
(3)
(67)
(20)
-
99
-
(42)
(5)
-
-
-
-
52
(26)
(3)
(10)
6
Brazil
243
12
(77)
-
178
-
(18)
(12)
-
-
-
-
148
(141)
-
2
(8)
North
America Europe
46
-
(20)
161
-
(42)
Storage
and
Other
67
6
(34)
Brazil
26
-
(4)
-
119
-
(45)
-
-
-
-
-
74
(89)
(1)
45
(3)
-
26
-
(10)
(1)
-
-
-
-
15
(24)
(12)
6
(5)
-
22
-
(6)
-
-
-
-
-
16
(8)
-
-
2
-
39
-
(17)
(1)
-
-
-
-
21
(29)
-
1
(6)
-
19
(25)
-
(6)
(82)
(89)
-
(28)
(26)
1,679
40
(577)
-
1,142
(82)
(407)
(18)
(28)
(26)
57
-
-
21
1
-
-
-
-
(22)
-
(231)
-
(10)
(3)
(9)
-
581
(539)
(29)
(26)
(43)
-
-
22
1
(3)
13
-
609
-
(246)
(22)
-
-
-
(341)
-
(265)
(5)
(20)
2
57
-
(82)
(632)
(39)
(28)
(26)
(22)
(341)
-
(782)
(33)
(49)
(28)
($ MILLIONS)
Revenues
Other income
Direct operating costs
Share of Adjusted EBITDA from
equity accounted investments
Adjusted EBITDA
Management service costs
Interest expense - borrowings
Current income taxes
Distributions attributable to
Preferred limited partners equity
Preferred equity
Share of interest and cash taxes from
equity accounted investments
Share of Funds From Operations
attributable to non-controlling interests
Funds From Operations
Depreciation
Unrealized financial instrument loss
Deferred income tax expense
Other
Share of earnings from
equity accounted investments
Net income attributable to
non-controlling interests
Net income (loss) attributable to Unitholders(2)
(1)
-
-
-
-
-
-
-
-
-
(33)
-
(33)
288
(56)
Share of earnings from equity-accounted investments of $2 million is comprised of amounts found on the share of Adjusted EBITDA, share of interest and cash taxes and share
of earnings lines. Net income attributable to participating non-controlling interests – in operating subsidiaries of $53 million is comprised of amounts found on Share of Funds
From Operations attributable to non-controlling interests and Net Income attributable to non-controlling interests.
Net income (loss) attributable to Unitholders includes net income (loss) attributable to GP interest, Redeemable/Exchangeable partnership units and LP Units. Total net income
(loss) includes amounts attributable to Unitholders, non-controlling interests, preferred limited partners equity and preferred equity.
-
(253)
288
-
-
174
-
(56)
-
(13)
-
(20)
-
26
-
10
-
19
-
1
-
-
(2)
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 128
The following table provides each segment’s results in the format that management organizes its segments to make operating decisions and
assess performance and reconciles Brookfield Renewable’s proportionate results to our consolidated statements of income on a line by line basis
by aggregating the components comprising the earnings from Brookfield Renewable’s investments in associates and reflecting the portion of each
line item attributable to non-controlling interests for the year ended December 31, 2016:
Contribution
Storage Corporate
Total
from Attributable
equity
accounted
investments
(37)
-
16
to non-
controlling
As per
IFRS
interests financials(1)
2,452
64
(1,038)
1,008
17
(468)
Hydroelectric
North
America
819
24
(295)
Colombia
192
3
(107)
-
548
-
(177)
(4)
-
-
-
-
367
(244)
1
31
(27)
-
88
-
(36)
(6)
-
-
-
-
46
(31)
-
6
4
Brazil
187
13
(70)
-
130
-
(24)
(9)
-
-
-
-
97
(125)
-
7
(5)
Attributable to Unitholders
Wind
North
America Europe
56
-
(24)
151
-
(36)
Brazil
17
-
(4)
-
115
-
(41)
-
-
-
-
-
74
(80)
-
49
4
-
32
-
(14)
-
-
-
-
-
18
(38)
-
6
6
-
13
-
(7)
-
-
-
-
-
6
(4)
-
-
(1)
and
Other
58
(1)
(26)
-
31
-
(12)
-
-
-
-
-
19
(18)
2
-
(2)
1
8
(24)
-
(15)
(62)
(91)
-
(15)
(25)
1,481
47
(586)
-
942
(62)
(402)
(19)
(15)
(25)
-
(208)
-
(6)
(21)
2
-
419
(540)
(3)
78
(19)
-
-
-
-
-
-
-
-
-
-
-
(12)
21
-
-
12
-
-
-
-
-
11
(2)
-
-
(9)
-
557
-
(216)
(25)
-
-
-
(316)
-
(252)
1
19
(19)
21
-
(62)
(606)
(44)
(15)
(25)
(12)
(316)
-
(781)
(4)
97
(38)
-
(9)
($ MILLIONS)
Revenues
Other income
Direct operating costs
Share of Adjusted EBITDA from
equity accounted investments
Adjusted EBITDA
Management service costs
Interest expense - borrowings
Current income taxes
Distributions attributable to
Preferred limited partners equity
Preferred equity
Share of interest and cash taxes from
equity accounted investments
Share of Funds From Operations
attributable to non-controlling interests
Funds From Operations
Depreciation
Unrealized financial instrument loss
Deferred income tax expense
Other
Share of earnings from
equity accounted investments
Net income attributable to
non-controlling interests
Net income (loss) attributable to Unitholders(2)
(1)
251
(65)
Share of earnings from equity-accounted investments of $nil is comprised of amounts found on the share of Adjusted EBITDA, share of interest and cash taxes and share of
earnings lines. Net income attributable to participating non-controlling interests – in operating subsidiaries of $65 million is comprised of amounts found on Share of Funds From
Operations attributable to non-controlling interests and Net Income attributable to non-controlling interests.
Net income (loss) attributable to Unitholders includes net income (loss) attributable to GP interest, Redeemable/Exchangeable partnership units and LP Units. Total net income
(loss) includes amounts attributable to Unitholders, non-controlling interests, preferred limited partners equity and preferred equity.
-
(233)
-
(26)
-
128
251
-
-
(65)
-
47
-
25
-
(8)
-
1
-
1
-
-
(2)
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 129
The following table provides each segment’s results in the format that management organizes its segments to make operating decisions and
assess performance and reconciles Brookfield Renewable’s proportionate results to our consolidated statements of income on a line by line basis
by aggregating the components comprising the earnings from Brookfield Renewable’s investments in associates and reflecting the portion of each
line item attributable to non-controlling interests for the year ended December 31, 2015:
Contribution
($ MILLIONS)
Revenues
Other income
Direct operating costs
Share of Adjusted EBITDA from
equity accounted investments
Adjusted EBITDA
Management service costs
Interest expense - borrowings
Current income taxes
Distributions attributable to
Preferred limited partners equity
Preferred equity
Share of interest and cash taxes from
equity accounted investments
Share of Funds From Operations
attributable to non-controlling interests
Funds From Operations
Depreciation
Unrealized financial instrument loss
Deferred income tax recovery
Other
Share of earnings from
equity accounted investments
Net income attributable to
non-controlling interests
Net income (loss) attributable to Unitholders(2)
(1)
Hydroelectric
North
America
819
23
(285)
Colombia
-
-
-
-
557
-
(179)
(5)
-
-
-
-
373
(218)
1
36
14
-
-
206
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Attributable to Unitholders
Wind
Storage Corporate
Total
Brazil
203
28
(67)
-
164
-
(18)
(10)
-
-
-
-
136
(113)
-
4
(8)
-
-
19
North
America Europe
56
8
(20)
150
12
(38)
Brazil
9
-
(1)
and
Other
59
-
(31)
-
124
-
(48)
-
-
-
-
-
76
(83)
2
16
(30)
-
-
(19)
-
44
-
(12)
-
-
-
-
-
32
(32)
-
2
(1)
-
-
1
-
8
-
(3)
-
-
-
-
-
5
(4)
-
-
-
-
-
1
-
28
-
(5)
-
-
-
-
-
23
(12)
(1)
-
(4)
-
-
6
-
5
(23)
-
(18)
(48)
(81)
-
(1)
(30)
1,296
76
(465)
-
907
(48)
(346)
(15)
(1)
(30)
-
-
-
(178)
-
(15)
20
(39)
-
-
(212)
-
467
(462)
(13)
78
(68)
-
-
2
from Attributable
equity
accounted
investments
(44)
-
18
to non-
controlling
As per
IFRS
interests financials(1)
1,628
122
(552)
376
46
(105)
26
-
-
6
-
-
-
(6)
-
-
9
1
-
-
-
317
-
(89)
(3)
-
-
-
(225)
-
(161)
3
2
-
26
-
(48)
(429)
(18)
(1)
(30)
(6)
(225)
-
(614)
(9)
80
(68)
(10)
-
(10)
-
-
156
-
156
2
Share of earnings from equity-accounted investments of $10 million is comprised of amounts found on the share of Adjusted EBITDA, share of interest and cash taxes and
share of earnings lines. Net income attributable to participating non-controlling interests – in operating subsidiaries of $69 million is comprised of amounts found on Share of
Funds From Operations attributable to non-controlling interests and Net Income attributable to non-controlling interests.
Net income (loss) attributable to Unitholders includes net income (loss) attributable to GP interest, Redeemable/Exchangeable partnership units and LP Units. Total net income
(loss) includes amounts attributable to Unitholders, non-controlling interests, preferred limited partners equity and preferred equity.
(2)
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 130
The following table presents information on a segmented basis about certain items in Brookfield Renewable’s statement of financial position:
(MILLIONS)
America Colombia
Brazil
America Europe Brazil
Other
Hydroelectric
North
Attributable to Unitholders
Wind
North
Solar Corporate
Total
Storage and
Other
Contribution
from Attributable
to non-
controlling
interests
equity
accounted
investments
Total
As at December 31, 2017:
Property, plant and equipment, at fair value
Total assets
Total borrowings
Total liabilities
For the year ended December 31, 2017:
Additions to property, plant and equipment
As at December 31, 2016:
Property, plant and equipment, at fair value
Total assets
Total borrowings
Total liabilities
For the year ended December 31, 2016:
Additions to property, plant and equipment
$ 11,396 $ 1,303 $ 1,908
$ 1,798 $ 482 $ 304 $
11 $
1,227 $
- $ 18,429 $
(1,451) $
10,118 $ 27,096
11,709
1,574
2,149
1,888
532
443
3,049
5,237
447
801
200
380
1,005
233
192
1,338
334
208
31
9
18
1,456
180 19,962
(1,040)
11,982
30,904
752
2,552
8,439
(848)
4,175
11,766
877
2,786 11,979
(1,039)
5,682
16,622
90
8
59
6
34
-
-
13
10
220
(10)
144
354
$ 10,922 $ 1,273 $ 1,895
$ 1,327 $ 545 $ 139 $
- $
491 $
- 16,592 $
(428) $
9,093 $ 25,257
11,219
1,577
2,059
1,389
587
153
2,946
5,414
467
824
194
340
727
990
249
337
50
51
86
9
79
3
18
1
-
-
-
-
561
182 17,727
(280)
10,290
27,737
215
2,229
7,077
268
2,418 10,642
(232)
(280)
3,337
10,182
4,703
15,065
18
8
222
(10)
146
358
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 131
Geographical Information
The following table presents consolidated revenue split by geographical region:
(MILLIONS)
United States
Colombia
Canada
Brazil
Europe
$
2017
871 $
797
480
366
111
2,625
2016
786 $
819
442
269
136
2,452
2015
799
-
426
265
138
1,628
The following table presents consolidated property, plant and equipment and equity-accounted
investments split by geographical region:
(MILLIONS)
United States
Colombia
Canada
Brazil
Europe
Other
$
$
2017
11,131
5,401
5,810
3,479
1,332
664
27,817
2016
10,163
5,275
5,845
2,922
1,258
-
25,463
7. OTHER INCOME
Brookfield Renewable’s other income for the year ended December 31 is comprised of the following:
(MILLIONS)
Interest income and other
Gain on available for sale investments (Note 3)
Gains on settlement of foreign currency contracts
Gain on disposal(1)
Compensation related to expired Brazilian
concession agreements(2)
$
2017
2016
32 $
15
-
-
41 $
-
23
-
2015
21
-
31
53
17
122
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.
-
47 $
-
64 $
$
(1)
(2)
8. 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
27
$
$
2017
567 $
161
226
24
978 $
2016
553 $
149
313
23
1,038 $
2015
396
119
15
22
552
(1) Fuel and power purchases are primarily attributable to our portfolio in Colombia.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 132
9. 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
12
2017
(9) $
(33)
-
14
(28) $
2016
(22) $
(36)
-
20
(38) $
2015
(6)
(45)
(25)
13
(63)
$
$
10. FOREIGN CURRENCY TRANSLATION
Brookfield Renewable’s foreign currency translation for the year ended December 31 shown in the
consolidated statements of comprehensive income (loss) 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
2017
2016
2015
12
$
$
506 $
(282)
(82)
48
190 $
1,186 $
(244)
(157)
201
986 $
(1,975)
697
202
(62)
(1,138)
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 133
11. INCOME TAXES
The major components of income tax recovery (expense) for the year ended December 31 are as follows:
(MILLIONS)
Income tax (expense) 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 (expense) recovery
2017
2016
2015
$
$
$
$
(39) $
(44) $
(18)
8 $
(42)
(15)
(49) $
(88) $
71 $
35
(9)
97 $
53 $
87
6
(15)
78
60
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
2017
2016
2015
(4) $
15
2 $
(7)
8
(17)
(248)
586
349 $
(55)
19
(41) $
(263)
(19)
(291)
$
$
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:
2017
2016
$
(50) $
5 $
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
(15)
1
(38)
14
-
(9)
(11)
54
14
-
Effective income tax (expense) recovery
53 $
(1) Statutory income tax expense is calculated at the domestic rates applicable to the profits in the country concerned.
(88) $
$
2015
(15)
(15)
10
68
14
(2)
60
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 63.31% for the year ended December 31, 2017
(2016: 384.03%). 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, 2017
Page 134
The following table details the expiry date, if applicable, of the unrecognized deferred tax assets as at
December 31:
(MILLIONS)
2018 to 2022
2023 and thereafter
$
2017
8
108
$
2016
-
98
The deferred tax assets and liabilities of the following temporary differences have been recognized in the
consolidated financial statements for the year ended December 31:
(MILLIONS)
As at January 1, 2015
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
As at December 31, 2016
Recognized in Net income (loss)
Recognized in equity
Business combination
Foreign exchange
Amount available
Difference
Net deferred
$
Non-capital
losses
403 $
73
(1)
for future
deductions
between tax and
carrying value
88 $
(11)
-
(2,986) $
16
(279)
tax (liabilities)
assets
(2,495)
78
(280)
5
(22)
458
24
17
-
-
499
(97)
13
79
14
-
(12)
65
(10)
-
-
1
56
(5)
-
-
4
(35)
223
(3,061)
83
(48)
(1,020)
(161)
(4,207)
53
341
(63)
(98)
(30)
189
(2,538)
97
(31)
(1,020)
(160)
(3,652)
(49)
354
16
(80)
(3,411)
As at December 31, 2017
$
508 $
55 $
(3,974) $
The deferred income tax liabilities include $2,561 million (2016: $2,948 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 $1,549 million (2016: $1,380 million).
As a result of the recent U.S. income tax reform, Brookfield Renewable's net deferred tax liability
decreased by $546 million, of which $41 million was recorded as a tax expense in net income and $587
million was recorded as a tax recovery in other comprehensive income. Over the long term, it is expected
that the decrease in the U.S. federal income tax rate to reduce our overall effective tax rate.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 135
12. PROPERTY, PLANT AND EQUIPMENT, AT FAIR VALUE
The following table presents a reconciliation of property, plant and equipment at fair value:
Notes
Hydroelectric
Solar and
Wind Other(1)
Total(2)
$ 15,210 $
3,315 $
41 $ 18,566
(MILLIONS)
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
Acquisitions through business combinations
3
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
Additions
Acquisitions through business combinations
Disposal
Items recognized through OCI
Change in fair value
Foreign exchange
Items recognized through net income
Change in fair value
Depreciation
3
4
183
307
-
1,141
(1,585)
(2)
(407)
51
624
(230)
52
(336)
(43)
(200)
55
229
-
16
(54)
-
(9)
289
1,160
(230)
1,209
(1,975)
(45)
(616)
$ 14,847 $
3,233 $
278 $ 18,358
269
5,731
190
1,114
71
10
187
21
(17)
(565)
(10)
(199)
18
-
54
51
(9)
(17)
358
5,741
431
1,186
(36)
(781)
$ 21,569 $
3,313 $
375 $ 25,257
253
-
-
828
332
(20)
(563)
95
618
(338)
91
177
(8)
(197)
6
627
-
(32)
(3)
(5)
(22)
354
1,245
(338)
887
506
(33)
(782)
As at December 31, 2017
(1) Includes solar, storage, biomass and Co-gen.
(2) Includes intangible assets of $13 million (2016: $14 million and 2015: $13 million) and construction work in process (“CWIP”) of
946 $ 27,096
$ 22,399 $
3,751 $
$601 million (2016: $663 million and 2015: $405 million).
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, 2017
Page 136
Discount rates, terminal capitalization rates and exit dates used in the valuation methodology, are
provided in the following table:
North America
Colombia
Brazil
Europe
2017
2016
2017 2016
2017
2016
2017
2016
Discount rate(1)
Contracted
4.9% - 6.0% 4.8% - 5.5% 11.3% N/A
8.9% 9.2% 4.1% - 4.5% 4.1% - 5.0%
Uncontracted
6.5% - 7.6% 6.6% - 7.2% 12.6% N/A 10.2% 10.5% 5.9% - 6.3% 5.9% - 6.8%
Terminal
capitalization rate(2) 6.2% - 7.5% 6.3% - 6.9% 12.6% N/A
Exit date
2037 N/A
(1)
(2)
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:
Discount rates are not adjusted for asset specific risks.
The terminal capitalization rate applies only to hydroelectric assets in the United States, Canada and Colombia.
2032 2031
N/A N/A
2031
2036
2037
2031
N/A
N/A
(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)
North
2017
America Colombia
Brazil
Europe
Total
(710) $
770
620
(620)
(180)
190
North
(130) $
130
310
(310)
(50)
50
(50) $
50
70
(70)
-
-
2016
(20) $
20
20
(20)
-
(910)
970
1,020
(1,020)
(230)
-
240
(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)
America Colombia
Brazil
Europe
$
(670) $
N/A $
(50) $
(20) $
730
540
(540)
(180)
N/A
N/A
N/A
N/A
50
70
(70)
-
20
20
(20)
-
25 bps decrease in terminal capitalization rate(1)
( 1 )
-
The terminal capitalization rate applies only to hydroelectric assets in the United States, Canada and Colombia.
N/A
190
-
Total
(740)
800
630
(630)
(180)
190
Terminal values are included in the valuation of hydroelectric assets in the United States, Canada and
Colombia. For the hydroelectric assets in Brazil, cash flows have been included based on the duration of
the authorization or useful life of a concession asset without consideration of potential renewal value. The
weighted-average remaining duration of the authorization or useful life of a concession asset at
December 31, 2017, is 15 years (2016: 15 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, 2017
Page 137
Per MWh(1)
1 - 10 years
Per MWh(1)
1 - 10 years
11 - 20 years
(1)
The following table summarizes the percentage of total generation contracted under power purchase
agreements as at December 31, 2017:
1 - 10 years
11 - 20 years
North America
58%
42%
Colombia
17%
-
Brazil
66%
57%
Europe
78%
35%
The following table summarizes power prices from long-term power purchase agreements that are linked
specifically to the related power generating assets:
11 - 20 years
(1)
The following table summarizes the estimates of future electricity prices:
Assumes nominal prices based on weighted-average generation.
North America
Colombia
$
84 COP 211,000 R$
88
-
Brazil
274
407
€
Europe
90
107
North America
Colombia
$
63 COP 238,000 R$
112
339,000
Brazil
309
458
€
Europe
78
95
Assumes nominal prices based on weighted-average generation.
Brookfield Renewable’s long-term view is anchored to the cost of securing new energy from renewable
sources to meet future demand growth between 2021 and 2025. A further one year change would
increase or decrease the fair value of property, plant and equipment by approximately $160 million (2016:
$130 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
Solar and other(1)
(1)
Includes biomass and Co-gen.
2017
12,740
3,030
933
16,703
$
$
2016
12,761
2,688
319
15,768
$
$
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 138
13. LONG-TERM DEBT AND CREDIT FACILITIES
The composition of debt obligations as at December 31 is presented in the following table:
2017
2016
(MILLIONS EXCEPT AS NOTED)
Corporate borrowings
Series 3 (C$200)
Series 4 (C$150)
Series 7 (C$450)
Series 8 (C$400)
Series 9 (C$400)
Series 10 (C$500)
Credit facilities
Subsidiary borrowings
Hydroelectric
Wind
Solar and other
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
2.6
0.8 $
159 $
18.9
2.8
4.1
7.4
9.0
119
358
318
318
398
163
144
382
344
321
400
6.4 $ 1,670 $ 1,754
4.5 $
887 $
887
6.3
5.8
11.0
8.8 $ 6,392
9.7
8.2
2,211
682
6,813
2,343
682
5.3
5.8
5.1
4.8
3.8
3.6
4.5
1.9
6.9
4.6
8.9
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
7.8 $ 6,249
13.1
18.8
1,735
41
6,600
1,879
41
6.5
9.0 $ 9,285 $ 9,838
6.4
9.0 $ 8,025 $ 8,520
Total debt
Add: Unamortized premiums(1)
Less: Unamortized financing fees(1)
Less: Current portion(2)(3)
11,842
12,479
10,260
10,870
1
(77)
(1,676)
$ 10,090
2
(80)
(1,034)
$ 9,148
(1)
(2)
(3)
Unamortized premiums and unamortized financing fees are amortized to interest expense over the terms of the borrowing
As part of the TerraForm Global transaction, Brookfield Renewable acquired $841 million of borrowings that were immediately
classified as current due to the change of control provision allowing the holders to direct TerraForm Global to redeem the
bonds at 101% of par value in the first quarter of 2018. Brookfield Renewable redeemed these borrowings at approximately
107% of par value in the first quarter of 2018 with a combination of available cash on hand and proceeds from note offering
that closed on February 22, 2018. See Note 20 – Cash and Cash Equivalents and Note 31 – Subsequent Events.
As part of the TerraForm Global transaction, Brookfield Renewable acquired project level financings that were in default prior
to the acquisition, had outstanding principal amounts totaling $342 million and mature in 2031. See Note 18 – Capital
Management..
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
Other(1)
$ 10,182 $
$ 7,338 $
267 $
1,502 $
1,188 $
1,104 $
(173) $
- $
302 $
238 $
Dec 31
11,766
10,182
Includes foreign exchange and amortization of unamortized premium and financing fees.
(MILLIONS)
2017
2016
(1)
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 139
Future repayments of Brookfield Renewable’s debt obligations, for each of the next five years and
thereafter are as follows:
(MILLIONS)
Corporate borrowings and
credit facilities
Subsidiary borrowings
Hydro
Wind
Solar and other
2018
2019
2020
2021
2022 Thereafter
Total
$
159 $
202 $
377 $
- $
984 $
835 $
2,557
206
665
646
366
115
3
1,013
122
3
822
125
2
317
132
4
3,668
1,052
24
6,392
2,211
682
$ 1,676 $
686 $ 1,515 $
949 $ 1,437 $ 5,579
11,842
Equity-accounted investments $
110 $
116 $
112 $
716 $
602 $ 3,003 $
4,659
$ 16,501
(1)
Subsidiary borrowings and corporate borrowings and credit facilities include $1 million and $77 million of unamortized
premiums and deferred financing fees, respectively.
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
2017
2016
2015
6
-
(1)
5
74
16
(14)
(4)
72
77
$
$
$
$
$
5
2
(1)
6
54
41
(17)
(4)
74
80
$
$
$
$
$
5
1
(1)
5
66
7
(15)
(4)
54
59
$
$
$
$
$
Corporate borrowings are obligations of a finance subsidiary of Brookfield Renewable, Brookfield
Renewable Partners ULC (“Finco”) (Note 30 - 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, Brookfield Renewable Energy L.P. (“BRELP”)
and certain other subsidiaries.
Our sole near time maturity is our C$200 million ($159 million) Series 3 medium-term notes which mature
in November 2018.
Subsidiary borrowings
Subsidiary borrowings are typically asset-specific, long-term, non-recourse borrowings denominated in
the domestic currency of the subsidiary. Subsidiary borrowings in North America, Europe and South
Africa consist of both fixed and floating interest rate debt. Subsidiary borrowings in South Africa consist of
floating interest rate debt indexed to the Johannesburg Interbank Agreed Rate (“JIBAR”) and U.S. dollar
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 140
denominated debt indexed to the London Interbank Offered Rate (“LIBOR”). Brookfield Renewable uses
interest rate swap agreements in North America, Europe and South Africa 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 include
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. Subsidiary borrowings in Malaysia consist of floating interest rate debt
indexed to the Kuala Lumpur Interbank Offering Rate (“KLIBOR”). Subsidiary borrowings in India consist
of fixed interest rate U.S. dollar denominated debt.
In March 2017, Brookfield Renewable completed the refinancing of a $60 million bank loan associated
with a 417 MW hydroelectric facility in Pennsylvania. The loan bears interest at LIBOR plus a margin of
3.75% and matures in March 2022.
In May 2017, Brookfield Renewable completed the refinancing associated with a 44 MW hydroelectric
portfolio in New England by issuing notes for $65 million. The notes carry a 4.86% coupon rate and
mature in May 2027.
In June 2017, Brookfield Renewable completed the refinancing associated with a 11 MW wind asset in
Arizona by securing a $11 million bank loan. The loan has been fully hedged for an all-in rate of 5.28%
and matures in June 2024.
In June 2017, Brookfield Renewable completed the financing associated with a 17 MW hydroelectric
facility in Quebec by issuing notes for C$55 million ($43 million). The notes bear an all-in rate of 4.49%
and mature in May 2044.
In July 2017, Brookfield Renewable completed the refinancing of a 360 MW hydroelectric portfolio in New
England. The financing was a $475 million green bond bearing interest at 4.4% with a maturity in July
2032.
In October 2017, Brookfield Renewable completed financing associated with a 47 MW portfolio of wind
farms in Ireland by securing €78 million ($92 million) of long-term debt, €6 million ($8 million) working
capital facility and €4 million ($4 million) debt reserve facility. The long-term debt matures in 2032 and
bears interest at EURIBOR plus a margin of 1.5%.
In December 2017, Brookfield Renewable completed a $305 million refinancing, associated with an 872
MW portfolio of hydroelectric facilities in New York at an all-in interest rate of 4.29% and with a maturity in
December 2030.
In December 2017, Brookfield Renewable completed a £17 million ($22 million) non-recourse financing
associated with a 16 MW wind asset in Northern Ireland. The long-term debt matures in 2035 and bears
interest at GBP LIBOR plus a margin of 2.20%.
In December 2017, Brookfield Renewable completed R$166 million ($50 million) of financing with respect
to a 28 MW hydroelectric facility currently under construction in Brazil. The loan bears interest at a rate of
TJLP plus 2.12% and matures in 2038.
Credit facilities
In June 2017, Brookfield Renewable extended the maturity of $1,600 million of its corporate credit
facilities by one year to June 30, 2022. The applicable margin is 1.20%. The credit facilities are used for
general working capital purposes and issuing letters of credit. The credit facilities bear interest at the
applicable banker’s acceptance 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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 141
During the first quarter of 2017, the committed unsecured revolving credit facility provided by Brookfield
Asset Management was increased to $400 million. During the fourth quarter of 2017, Brookfield
Renewable extended the maturity by one year to December 2018. Interest rate applicable on the draws is
LIBOR plus 2%.
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.
The following table summarizes the available portion of credit facilities as at December 31:
(MILLIONS)
Authorized credit facilities
Draws on credit facilities(1)
Issued letters of credit
2017
2016
$
2,090 $
1,890
(685)
(193)
(673)
(250)
967
Available portion of credit facilities
(1) Comprised of $685 million borrowed under unsecured corporate credit facilities guaranteed by Brookfield Renewable.
Excludes $202 million borrowed under a subscription credit facility made available to a Brookfield sponsored private fund.
1,212 $
$
As at December 31, 2017, a subsidiary of Brookfield Renewable, as a qualified borrower, had received
$202 million under a credit facility of a private fund sponsored by Brookfield Asset Management. The
facility has an interest rate of LIBOR plus 1.5%, a maturity date of June 2019 and is unsecured.
14. 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
2017
6,298 $
58
2,843
616
2016
5,589
55
2,680
576
$
9,815 $
8,900
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 142
Participating non-controlling interests – in operating subsidiaries
The net change in participating non-controlling interests – in operating subsidiaries is as follows:
Brookfield
Americas
The
Infrastructure Infrastructure Infrastructure Catalyst
Brookfield
Brookfield
Isagen
institu-
tional
Group investors
Isagen
public
non-con
-trolling
interests
Other
Total
(MILLIONS)
Fund
Fund II
Fund III
As at December 31, 2014
$
914 $
937 $
- $ 126 $
- $
- $
85 $ 2,062
Net income
OCI
Capital contributions
Distributions
Other
26
89
-
(70)
(1)
27
144
460
(126)
(1)
-
-
-
-
-
14
(12)
-
(7)
-
-
-
-
-
-
-
-
-
-
-
2
(17)
-
(5)
2
69
204
460
(208)
-
As at December 31, 2015
$
958 $
1,441 $
- $ 121 $
- $
- $
67 $ 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)
-
47
148
1,473
-
-
7
19
205
-
1,417
-
(1,627)
2
6
-
-
(4)
-
65
635
2,621
1,417
(119)
(1,617)
As at December 31, 2016
$
963 $
1,654 $
1,085 $ 127 $ 1,675 $
14 $
71 $ 5,589
Net (loss) income
OCI
Capital contributions
Acquisition
Distributions
Purchase of Isagen shares
Other
(29)
(76)
-
-
(8)
-
-
(13)
269
89
-
(317)
-
-
33
111
186
525
(88)
(1)
1
12
2
-
-
47
78
19
-
(7)
(115)
-
-
(5)
2
-
(1)
-
-
-
5
(9)
3
-
-
-
53
383
294
525
(4)
(539)
-
-
(1)
(6)
As at December 31, 2017
$
850 $
1,682 $
1,852 $ 134 $ 1,701 $
9 $
70 $ 6,298
Interests held by third parties
75-80%
50-60%
23-71%
25%
53%
0.5% 21-50%
The privatization of the Isagen portfolio was completed on March 31, 2017 and its shares were delisted
from the Colombia Stock Exchange. During the year ended December 31, 2017, Brookfield Renewable,
together with its co-investors, acquired an additional 3,358,523 shares in Isagen. In accordance with
IFRS 10, Consolidated Financial Statements, Brookfield Renewable is accounting for the additional
interests in Isagen purchased subsequent to the initial investments as equity transactions related to the
acquisition of non-controlling interest. As at December 31, 2017 Brookfield Renewable together with its
co-investors owns approximately 99.5% interest in Isagen. The remaining approximately 0.5% ownership
interest not held by Brookfield Renewable and its co-investors remains as non-controlling interest.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 143
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
(MILLIONS)
Interests held by third parties
Infrastructure Infrastructure Infrastructure The Catalyst
Group
25%
Fund
75-80%
Fund II
50-60%
Isagen(2)
76%
Fund III(1)
69-71%
United
States,
Brazil, India,
China, South
United
States,
Brazil
United
States,
Brazil,
Europe
Africa United States
Colombia
Total
Other
21-50%
United
States,
Brazil,
Canada
Place of business
For the year ended
December 31, 2015:
Revenue
Net income
Total comprehensive
income (loss)
Net income allocated to
non-controlling interests
For the year ended
December 31, 2016:
Revenue
Net (loss) income
Total comprehensive
income (loss)
Net (loss) income allocated to
non-controlling interests
As at December 31, 2016:
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, 2017:
Revenue
Net (loss) income
Total comprehensive
(loss) income
Net (loss) income allocated
to non-controlling interests
As at December 31, 2017:
Property, plant and
equipment, at fair value
Total assets
Total borrowings
Total liabilities
Carrying value of non-
controlling interests
(1)
(2)
$
$
$
$
$
$
136 $
34
402 $
49
144
247
26
27
- $
-
-
-
160 $
56
8
14
- $
-
-
-
30 $
8
(51)
2
728
147
348
69
118 $
(22)
394 $
(23)
28 $
(8)
164 $
62
819 $
110
27 $
5
1,550
124
37
356
(18)
(16)
(8)
(5)
70
16
502
86
31
2
988
65
1,807 $
1,865
571
631
4,816 $
5,125
1,881
2,235
848 $
855
313
319
970 $
1,072
450
466
5,275 $
6,539
1,924
3,396
417 $ 14,133
15,884
428
5,180
41
7,107
60
963 $
1,654 $
383 $
127 $
2,391 $
71 $
5,589
123 $
(34)
430 $
(20)
53 $
18
135 $
47
797 $
89
32 $
7
1,570
107
(133)
529
126
(29)
(13)
13
57
12
236
67
-
3
815
53
1,667 $
1,718
556
628
5,153 $
5,430
2,040
2,422
2,149 $
3,294
1,502
1,678
964 $
1,066
413
432
5,401 $
6,526
1,858
3,336
411 $ 15,745
18,460
426
6,411
42
8,559
63
1,682 $
Excludes information relating to Isagen which is presented separately.
The total third parties ownership interest in Isagen as of December 31, 2017 was 75.9% and comprised of Brookfield Infrastructure Fund III:
22.9%, Isagen Institutional investors 52.5% and Isagen public non-controlling interests: 0.5%.
1,138 $
2,424 $
850 $
134 $
70 $
6,298
$
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 144
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, 2017, general partnership units, and Redeemable/Exchangeable partnership units
outstanding were 2,651,506 (December 31, 2016: 2,651,506) and 129,658,623 (December 31, 2016:
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
2017
2016
5 $
30
35 $
5
19
24
243 $
278 $
232
256
$
$
$
$
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 145
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)
$
$
2017
2016
2015
2,625 $
51
1,401
2,452 $
40
1,369
1,628
103
5
(1)
(23)
-
(29)
-
1
27,096 $
30,904
11,766
16,622
25,257
27,737
10,182
15,065
58
2,843
55
2,680
Allocated based on weighted-average GP interest, Redeemable/Exchangeable partnership units and LP Units of 2.7 million, 129.7 million, and
173.5 million, respectively (2016: 2.7 million, 129.7 million, and 156.4 million, respectively and 2015: 2.7 million, 129.7 million, and 143.3 million,
respectively).
Allocated based on outstanding GP interest, Redeemable/Exchangeable partnership units and LP Units of 2.7 million, 129.7 million, and 180.4
million, respectively (2016: 2.7 million, 129.7 million, and 166.8 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
Cumulative
dividend
rate (%)
Earliest
permitted
redemption
date
5.45
4.51
9.96
4.11
7.00
31.03
3.36 Apr 30, 2020 $
3.63 Apr 30, 2020
4.40 Jul 31, 2019
5.00 Apr 30, 2018
5.00 Jul 31, 2018
Dividends declared
for the year ended
December 31
2017
2016
2017
4 $
3
8
4
7
3 $
108 $
3
8
4
7
90
197
82
139
2016
101
84
185
76
130
576
$
26 $
25 $
616 $
(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, 2017, none of the issued Class A Preference Shares have been
redeemed by BRP Equity.
Class A Preference Shares – Normal Course Issuer Bid
In June 2017, the TSX accepted notice of BRP Equity’s intention to renew the normal course issuer bid in
connection with its outstanding Class A Preference Shares for another year to June 26, 2018, or earlier
should the repurchases be completed prior to such date. Under this normal course issuer bid, it is
permitted to repurchase up to 10% of the total public float for each respective series of our Class A
Preference Shares.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 146
15. 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)
Series 11 (C$250)
2.89
7.00
8.00
10.00
27.89
Cumulative
Shares distribution
rate (%)
outstanding
Earliest
permitted
redemption
date
Distributions declared
for the year ended
December 31
2017
2016
2017
5.59 Apr 30, 2018 $
4 $
3 $
49 $
5.50 Jan 31, 2021
5.75 Jul 31, 2021
5.00 Apr 30, 2022
8
8
8
7
5
-
128
147
187
$
28 $
15 $
511 $
324
2016
49
128
147
-
On February 14, 2017, Brookfield Renewable issued 10,000,000 Class A, Series 11 Preferred Limited
Partnership Units (the “Series 11 Preferred 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%.
The holders of Series 11 Preferred Units will have the right, at their option, to convert their Series 11
Preferred Units into Class A Preferred Limited Partnership Units, Series 12 (the “Series 12 Preferred
Units”), subject to certain conditions, on April 30, 2022 and on April 30 every five years thereafter. The
holders of Series 12 Preferred Units will be entitled to receive floating rate cumulative preferential cash
distributions equal to the sum of the 90-day Canadian Treasury Bill Rate plus 3.82%.
16. LIMITED PARTNERS’ EQUITY
Limited partners’ equity
As at December 31, 2017, 180,388,361 LP Units were outstanding (December 31, 2016: 166,839,324)
including 56,068,944 (December 31, 2016: 51,125,944) held by Brookfield. Brookfield owns all general
partnership interests in Brookfield Renewable representing a 0.01% interest.
During the year ended December 31, 2017, 302,037 LP Units (2016: 298,946 LP Units) were issued
under the distribution reinvestment plan.
As at December 31, 2017, Brookfield Asset Management’s direct and indirect interest of 185,727,567 LP
Units and Redeemable/Exchangeable partnership units represents approximately 60% of Brookfield
Renewable on a fully-exchanged basis and the remaining approximate 40% is held by public investors.
On an unexchanged basis, Brookfield holds a 31% direct limited partnership interest in Brookfield
Renewable, a 42% direct interest in BRELP through the ownership of Redeemable/Exchangeable
partnership units and a direct 1% GP interest in BRELP as at December 31, 2017.
In December 2017, 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 9
million LP Units, representing approximately 5% of the issued and outstanding LP Units, for capital
management purposes. The bid will expire on December 28, 2018, or earlier should Brookfield
Renewable complete its repurchases prior to such date.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 147
Issuance of LP Units
On July 6, 2017, Brookfield Renewable completed the issuance of 8,304,000 non-voting LP Units on a
bought deal basis at a price of C$42.15 per LP Unit for gross proceeds of C$350 million ($271 million).
Concurrently, Brookfield Asset Management purchased 4,943,000 LP Units at the offering price (net of
underwriting commission). The aggregate gross proceeds of the offering and the concurrent private
placement was C$550 million ($422 million). Brookfield Renewable incurred C$15 million ($11 million) in
related transaction costs inclusive of fees paid to underwriters.
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 $1 million and $62 million, respectively. BRELP
ultimately used the net proceeds to repay outstanding indebtedness and for general corporate purposes.
Distributions
The composition of the distribution for the year ended December 31 is presented in the following table:
(MILLIONS)
Brookfield
External LP Unitholders
2017
101 $
227
328 $
2016
83
198
281
$
$
In February 2017, unitholder distributions were increased to $1.87 per LP Unit on an annualized basis, an
increase of nine cents per LP Unit, which took effect with the distribution payable in March 2017.
17. GOODWILL
The following table provides a reconciliation of goodwill:
(MILLIONS)
Balance, beginning of year
Acquired through business acquisition
Foreign exchange
Balance, end of year
18. CAPITAL MANAGEMENT
2017
896 $
-
5
901 $
2016
-
799
97
896
$
$
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, 2017 was 40% (2016: 38%).
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
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 148
outstanding debt. Brookfield Renewable is dependent on the distributions made by its subsidiaries to
service its debt.
As part of the TerraForm Global transaction, Brookfield Renewable acquired assets with project level
financings that were in default prior to the acquisition, had outstanding principal amounts totaling $342
million and mature in 2031. As at December 31, 2017, the loans were not in compliance with certain
covenants due to the SunEdison Bankruptcy, as well as issues with contractors under the engineering,
procurement and construction contract. The loan balances have been classified as current as at
December 31, 2017. Brookfield Renewable is currently working with all the lenders to cure such defaults
and release the restrictions placed on the projects. Except for the aforementioned defaults, Brookfield
Renewable complied with all material financial covenants as of December 31, 2017.
Brookfield Renewable’s strategy during 2017, which was unchanged from 2016, was to maintain the
measure set out in the following schedule as at December 31:
2017
2016
(MILLIONS)
Total debt
Current portion of long-term debt(1)
Long-term debt and credit facilities
$
$
Deferred income tax liabilities, net(2)
Equity
Total capitalization
Debt to total capitalization
(1)
1,034
9,148
10,182
3,652
12,672
26,506
38%
As part of the TerraForm Global transaction, Brookfield Renewable acquired $841 million of borrowings that were immediately
classified as current due to the change of control provision allowing the holders to direct TerraForm Global to redeem the
bonds at 101% of par value in the first quarter of 2018. Brookfield Renewable redeemed these borrowings at approximately
107% of par value in the first quarter of 2018 with a combination of available cash on hand and proceeds from note offering
that closed on February 22, 2018. See Note 20 – Cash and Cash Equivalents and Note 31 – Subsequent Events
Deferred income tax liabilities less deferred income tax assets.
1,676
10,090
11,766
3,411
14,282
29,459
40%
$
(2)
$
19. EQUITY-ACCOUNTED INVESTMENTS
The following are Brookfield Renewable’s equity-accounted investments as at December 31:
(MILLIONS)
FHH (Guernsey) Limited
TerraForm Power Inc.(1)
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
%
25 $
Europe
United States,
Canada
United States
Brazil
Canada
United States,
Europe
16
50
50
50
Carrying value
2017
245 $
212
173
28
57
2016
-
-
114
29
58
5
206
14 - 50
6
721 $
$
(1)
The fair value of the investment based on quoted market price of the shares as of December 31, 2017 was $278 million.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 149
The following table outlines the changes in Brookfield Renewable’s equity-accounted investments for the
year ended December 31:
2017
206 $
2
2016
197 $
-
$
(MILLIONS)
Balance, beginning of year
Share of net income
Share of OCI
Revaluation of property, plant and equipment
Other
Dividends declared
Capital distributions, net
Acquisition of European Storage (Note 3)
Acquisition of TerraForm Power (Note 3)
Foreign exchange translation
Balance, end of year
The following tables summarize certain financial information of equity-accounted investments:
7
1
(6)
-
-
-
7
206 $
54
2
(31)
-
248
221
19
721 $
$
2015
273
10
96
-
(19)
(144)
-
-
(19)
197
(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 (loss) income
Share of net income (loss)
Cash earnings
Non-cash loss
20. CASH AND CASH EQUIVALENTS
2017
2016
$
477 $
8,098
213
687
4,294
958
45
864
70
42
463
71
2017
2016
2015
$
310 $
(24)
29
(27)
74 $
-
9
(9)
89
19
20
(10)
Brookfield Renewable’s cash and cash equivalents as at December 31 are as follows:
(MILLIONS)
Cash(1)
Short-term deposits
$
2017
790 $
9
2016
210
13
(1)
223
As part of the TerraForm Global transaction, Brookfield Renewable acquired $611 million of cash and cash equivalents, which
under the indenture for TerraForm Global’s senior notes, is not available for distribution. In the first quarter of 2018, Brookfield
Renewable used a portion of this cash as well as proceeds from a note offering that closed on February 22, 2018 to redeem
these borrowings. See Note 13 – Long-term Debt and Credit Facilities and Note 31 – Subsequent Events.
799 $
$
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 150
21. 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
Note
23
$
$
2017
195 $
85
4
284
(103)
181 $
2016
135
104
11
250
(129)
121
22. 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
2017
360 $
82
112
554 $
2016
262
103
89
454
$
$
As at December 31, 2017, 99% (2016: 95%) 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, 2017 and 2016 an allowance for doubtful accounts for trade receivables was not deemed necessary.
23. 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
Acquisition downpayment
Other
Accumulated
Amortization Net Book Value Net book value
Cost
2017
$
103
$
-
$
103
$
32
46
82
(27)
-
(6)
5
46
76
$
263
$
(33)
$
230
$
2016
129
6
-
41
176
At December 31, 2017 and 2016, restricted cash was held primarily to satisfy lease payments and credit
agreements.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 151
24. 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
2017
$
271 $
2016
147
117
64
35
-
29
26
87
68
55
54
24
32
(1)
467
Includes amounts payable only to external LP Unitholders. Amounts payable to Brookfield are included in due to related
parties.
542 $
$
25. 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
Commitments for power purchase agreements
Concession payment liability
Deferred revenue
Other
Notes
2017
$
29
3
$
80
89
85
18
13
9
9
41
2016
111
87
47
16
-
10
7
32
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.
$
344
$
310
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 152
26. COMMITMENTS, CONTINGENCIES AND GUARANTEES
Commitments
In the course of its operations, Brookfield Renewable and its subsidiaries have entered into agreements
for the use of water, land and dams. Payment under those agreements varies with the amount of power
generated. The various agreements can be renewed and are extendable up to 2091.
The remaining development project costs on two Brazilian hydroelectric projects totaling 47 MW and one
28 MW wind project in Europe are expected to be $44 million. All three projects are expected to be fully
operational in 2018.
As at December 31, 2017, Brookfield Renewable had commitments for future minimum lease payments
under non-cancellable leases which fall due as follows:
(MILLIONS)
2018
2019
2020
2021
2022
Thereafter
Total
Contingencies
$
$
33
32
31
30
27
262
415
Brookfield Renewable and its subsidiaries are subject to various legal proceedings, arbitrations and
actions arising in the normal course of business. While the final outcome of such legal proceedings and
actions cannot be predicted with certainty, it is the opinion of management that the resolution of such
proceedings and actions will not have a material impact on Brookfield Renewable’s consolidated financial
position or results of operations.
Brookfield Renewable, on behalf of Brookfield Renewable’s subsidiaries, and the subsidiaries themselves
have provided letters of credit, which include, but are not limited to, guarantees for debt service reserves,
capital reserves, construction completion and performance. The activity on the issued letters of credit by
Brookfield Renewable can be found in Note 13 – 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. Brookfield Renewable’s subsidiaries have similarly provided letters of credit, which
include, but are not limited to, guarantees for debt service reserves, capital reserves, construction
completion and performance.
As at December 31, letters of credit issued by Brookfield Renewable along with institutional investors and
its subsidiaries were as follows:
(MILLIONS)
Brookfield Renewable along with institutional investors
Brookfield Renewable's subsidiaries
Brookfield Renewable Partners L.P.
Annual Report
2017
76 $
468
544 $
2016
66
483
549
$
$
December 31, 2017
Page 153
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.
27. 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.
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, 2017 is $14 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, 2017 of $82 million (2016: $62
million and 2015: $48 million).
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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 154
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.
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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 155
Power Services Agreements
Power Agency Agreements
Certain Brookfield Renewable subsidiaries have entered into Power Agency Agreements appointing
Brookfield as their exclusive agent 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 8 - 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 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 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%.
Except as set out below in respect to TerraForm Power and Isagen, 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 power generating operations
with institutional investors, Brookfield agreed to provide to Brookfield Renewable the authority to direct
the election of the Boards of Directors of the BIF III Entities. Brookfield Renewable’s economic interests in
the BIF III Entities are between 24% and 31%.
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
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.
Brookfield Renewable entered into a voting agreement with the Brookfield subsidiary that ultimately
controls TerraForm Power. Pursuant to this voting agreement, Brookfield Renewable is entitled to direct
the election of one of the four directors of the Brookfield subsidiary, thereby providing Brookfield
Renewable with significant influence over this subsidiary.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 156
Brookfield Asset Management has provided a $400 million committed unsecured revolving credit facility
maturing in December 2018. See Note 13 – Long-term debt and credit facilities for further details.
Brookfield Asset Management had also placed funds on deposit with Brookfield Renewable in the amount
of $140 million during the first quarter of the current year, which was repaid prior to the end of the first
quarter. The interest expense on the draws from the credit facility and the deposit totaled $1 million.
In 2011, on formation of Brookfield Renewable, Brookfield Asset Management transferred certain
development projects to Brookfield Renewable for no upfront consideration but is entitled to receive
variable consideration on commercial operation or sale of these projects. An amount of $8 million has
been paid relating to the commissioning of a 25 MW hydroelectric facility in Brazil.
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
2017
2016
2015
601 $
527 $
6
8
607 $
535 $
(13) $
(3) $
(24)
(19)
(56) $
(82) $
(23)
(20)
(46) $
(62) $
469
6
475
(5)
(22)
(30)
(57)
(48)
$
$
$
$
$
The following table reflects the impact of the related party agreements and transactions on the
consolidated statements of financial position as at December 31:
(MILLIONS)
Current assets
Due from related parties
Amounts due from
Current liabilities
Due to related parties
Amount due to
Related party
2017
2016
Brookfield
Equity-accounted investments and other
Brookfield
$
$
$
54 $
6
60 $
47
7
54
48 $
48
Accrued distributions payable on LP
Units and Redeemable/Exchangeable
partnership units
Amount due to
Current assets
Brookfield
Equity-accounted investments and other
32
32
$
112 $
26
2
76
Amounts due from Brookfield are non-interest bearing, unsecured and due on demand.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 157
Current liabilities
Amounts due to Brookfield are unsecured, payable on demand and relate to recurring transactions.
28. 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
2017
(40)
32
(17)
(25)
$
$
2016
30
(160)
(7)
(137)
$
$
2015
(72)
2
8
(62)
$
$
29. 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 the United States registered plans, actuarial valuations are required annually. For
the Canadian registered plans, actuarial valuations are required on a triennial basis if the funding level of
the plan is above a certain threshold. Currently, all Canadian plans are on a triennial schedule. In the
Colombian business, 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 January 2015 to January 2018. 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.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 158
Actuarial assumptions as at December 31:
Defined benefit Non-pension Defined benefit Non-pension Defined benefit Non-pension
pension plans benefit plans
benefit plans
pension plans
2016
(%)
2017
(%)
2015
(%)
pension plans
benefit plans
2.4 - 7.3
1.5 - 3.5
3.7 - 7.1
N/A
2.2 - 7.3
1.5 - 3.5
4.1 - 7.3
N/A
2.9 - 4.7
2.0 - 2.5
4.2 - 4.7
N/A
2.5 - 4.0
N/A
2.5 - 4.0
5.3 - 6.9
2.5 - 4.0
N/A
2.5 - 4.0
5.3 - 6.9
2.5 - 3.0
N/A
2.5 - 3.0
6.3 - 7.1
Discount rate
Rate of price inflation
Rate of compensation
increases
Health care trend rate(1)
(1)
Assumed immediate trend rate at year-end.
Plan obligations and the annual pension expense are determined on an actuarial basis and are affected
by numerous assumptions and estimates including the market value of plan assets, 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
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, 2017, 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
(11)
13
4
(4)
N/A
N/A
(4)
5
N/A
N/A
4
(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, 2017
Page 159
Expense recognized in the consolidated statements of income and consolidated statements of
comprehensive income (loss) for the year ended December 31:
(MILLIONS)
Current service costs
Past service costs (recovery)
Interest expense
Administrative expenses
Recognized in consolidated
statement of income
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
2015
2016
3
3
$
$
1
-
1
2
1
1
pension plans benefit plans
2017
3
$
(1)
2
1
1
(1)
2
-
1
-
3
-
1
-
3
-
$
$
$
5
(8)
1
7
-
-
5
$
4
-
(2)
3
1
2
6
$
6
(2)
(1)
5
-
2
8
$
4
-
(1)
1
-
-
4
$
6
(1)
2
(2)
2
$
1
7
$
2
-
(5)
(1)
-
(6)
(4)
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
2017
2016
2015
$
$
172
(135)
37
$
$
57
(5)
52
$
$
158
(119)
39
$
$
53
(5)
48
$
$
124
(103)
21
$
$
35
-
35
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 160
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 (recovery) cost
Interest expense
Remeasurement losses (gains)
Actuarial changes arising
from changes in
$
2017
$
158
3
(1)
7
demographic assumptions
1
Actuarial changes arising
from changes in
financial assumptions
Experience adjustments
Benefits paid
Business combination
Exchange differences
Balance, end of year
7
-
(7)
-
4
172
$
$
53
1
-
3
(2)
3
1
(2)
-
-
57
$
$
2016
$
124
3
-
7
(1)
5
-
(8)
25
3
158
$
35
1
-
3
(1)
1
-
(2)
14
2
53
$
$
2015
$
128
3
1
5
2
(2)
2
(5)
-
(10)
124
$
43
1
(1)
2
(5)
(1)
-
(2)
-
(2)
35
Expected employer’s contributions to the defined benefit plans for the year ended December 31, 2018 are
$6 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
2017
$
2016
$
(MILLIONS)
$
$
Balance, beginning of year
103
Interest income
5
Return on plan assets
2
Employer contributions
7
Business combination
9
Benefits paid
(8)
Exchange differences
1
Balance, end of year
119
The composition of plan assets as at December 31 is as follows:
119
5
8
5
-
(7)
5
135
5
-
-
2
-
(2)
-
5
$
$
$
-
-
-
3
4
(2)
-
5
$
$
2015
$
108
4
1
5
-
(5)
(10)
103
$
$
Asset category:
Cash and cash equivalents
Equity securities
Debt securities
Real estate
2017
(%)
2
54
44
-
100
-
-
-
2
-
(2)
-
-
2016
(%)
5
50
44
1
100
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 161
30. SUBSIDIARY PUBLIC ISSUERS
The following tables provide consolidated summary financial information for Brookfield Renewable, BRP
Equity, and Finco:
(MILLIONS)
As at December 31, 2017:
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, 2016:
Brookfield
Renewable(1)
BRP
Equity
Holding
Finco Entities(1)(2) Subsidiaries(1)(3)
Brookfield
Other Consolidating Renewable
adjustments(4) consolidated
$
32 $ 412 $ 1,691 $
525 $
2,816
$
(3,810) $ 1,666
4,483
262
-
20,142
29,508
(25,157)
29,238
43
-
7
180
3,024
3,071
(3,811)
2,514
- 1,505
693
12,670
(760)
14,108
-
-
-
-
511
-
616
-
-
-
-
-
-
6,298
-
6,298
2,843
-
516
-
-
-
-
-
(516)
2,843
616
511
Current assets
Long-term assets
Current liabilities
Long-term liabilities
$
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
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)
-
-
-
-
324
-
576
-
-
-
-
-
-
5,589
-
5,589
2,680
-
324
-
-
-
-
-
(324)
2,680
576
324
Includes investments in subsidiaries under the equity method.
Includes BRELP, BRP Bermuda Holdings I Limited, Brookfield BRP Holdings (Canada) Inc. and Brookfield BRP Europe
Holdings Limited, 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, 2017
Page 162
Brookfield
Renewable(1)
BRP
Equity
Holding
Other Consolidating Renewable
Finco Entities(1)(2) Subsidiaries(1)(3) adjustments(4) consolidated
Brookfield
$
$
$
- $
- $
- $
- $
2,625 $
- $
2,625
(4)
10
(1)
(435)
631
(150)
51
- $
- $
- $
1 $
2,451 $
- $
2,452
(20)
-
(1)
(100)
558
(397)
40
- $
- $
- $
8 $
1,620 $
- $
1,628
2
-
(1)
(42)
235
(91)
103
(MILLIONS)
For the year ended
December 31, 2017
Revenues
Net income (loss)
For the year ended
December 31, 2016
Revenues
Net income (loss)
For the year ended
December 31, 2015
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 13 – Long-term debt and credit facilities for additional details regarding the medium-term
corporate notes issued by Finco. See Note 14 – Non-controlling interests for additional details regarding
Class A Preference Shares issued by BRP Equity.
31. SUBSEQUENT EVENTS
On January 16, 2018, Brookfield Renewable issued 10,000,000 Series 13 Preferred LP Units at a price of
C$25 per unit for gross proceeds of C$250 million ($201 million).
On January 19, 2018, Brookfield Renewable completed financing associated with its equity-accounted 2.1
GW pumped storage facility in the United Kingdom by securing £60 million ($83 million) of long-term debt
and £90 million ($125 million) letter of credit facility. The long-term debt matures in 2021 and bears
interest at LIBOR plus a margin of 2.75%.
On January 29, 2018, Brookfield Renewable completed R$130 million ($40 million) of financing with
respect to a 19 MW hydroelectric facility currently under construction in Brazil. The loan bears interest at
a rate of TJLP plus 2.15% and matures in 2038.
On February 15, 2018, Brookfield Renewable completed a refinancing associated with a 296 MW
hydroelectric facility in the United States. The financing was a $350 million interest only green bond
bearing interest at 4.5%, maturing in 2033. Proceeds were used to repay the existing principal amount of
$315 million and the excess was distributed to investors.
On February 22, 2018, TerraForm Global issued $400 million of senior notes at 6.13%, maturing in March
2026. Along with cash on the balance sheet, proceeds were used to repay the existing $760 million of
9.75% senior notes due in 2022. Additionally, TerraForm Global secured a $45 million revolving credit
facility, maturing in February 2021.
On February 27, 2018, Brookfield Renewable completed a COP 750 billion ($262 million) bond
refinancing associated with the Colombian business.
Brookfield Renewable Partners L.P.
Annual Report
December 31, 2017
Page 163
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
Wyatt Hartley
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: BEP.PR.K (Preferred LP Units – Series 11)
TSX: BEP.PR.M (Preferred LP Units – Series 13)
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
Renewable
Investor Information
Visit
at
https://bep.brookfield.com for more information. The
2017 Annual Report and Form 20-F are also
available online. For detailed and up-to-date news
and information, please visit the News Release
section.
online
Additional financial information is filed electronically
with various securities regulators in United States
and Canada through EDGAR at www.sec.gov and
through SEDAR at www.sedar.com.
Shareholder enquiries should be directed to the
Investor Relations Department at (416) 369-2616 or
enquiries@brookfieldrenewable.com
BROOKFIELD RENEWABLE PARTNERS L.P.
bep.brookfield.com
NYSE: BEP
TSX: BEP.UN