Brookfield Renewable Partners L.P. — 2022 Form 20-F
Reporting period: Fiscal year ended December 31, 2022; the filing is an annual report, not a standalone Q4 filing. Financial statements are audited and prepared under IFRS in U.S. dollars. “Funds From Operations” (FFO) and proportionate results are non-IFRS measures.
Business context and key metrics
Brookfield Renewable owns and operates a global renewable power and sustainable-solutions portfolio. At year-end, reported capacity was 25,377 MW and proportionate long-term average generation was 30,126 GWh. The portfolio spans hydroelectric, wind, utility-scale solar, distributed generation, storage and emerging transition businesses.
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue, IFRS | $4.711 billion | $4.096 billion |
| Net income (loss), consolidated | $138 million | $(66) million |
| Net loss attributable to unitholders | $(295) million | $(368) million |
| Basic loss per LP unit | $(0.60) | $(0.69) |
| Proportionate Adjusted EBITDA | $2.002 billion | $1.876 billion |
| FFO | $1.005 billion | $934 million |
| FFO per unit | $1.56 | $1.45 |
| Operating cash flow | $1.711 billion | $734 million |
| Capital expenditures | $2.190 billion | $1.967 billion |
| Available liquidity at year-end | $3.695 billion | $4.129 billion |
| Total borrowings, IFRS | $24.850 billion | $21.529 billion |
Consolidated interest expense was $1.224 billion, up from $981 million; depreciation was $1.583 billion, up from $1.501 billion. The filing does not provide a single comparable IFRS operating-margin measure. The company targets a long-term payout ratio of about 70% of FFO; this is a target, not a guarantee.
Material changes and Q4 performance
- Revenue rose about 15%, while FFO increased about 8%. Management attributed FFO growth to new assets entering service, higher realized prices and favorable hydro generation compared with 2021.
- Actual proportionate generation was 28,669 GWh, below the 30,126 GWh long-term average but above 27,150 GWh in 2021. Capacity increased from 21,049 MW to 25,377 MW.
- For Q4, revenue was $1.196 billion versus $1.091 billion; FFO was $225 million versus $214 million; and net loss attributable to unitholders was $82 million versus $57 million.
- Property, plant and equipment increased to $54.283 billion, including a $3.745 billion revaluation gain recognized in other comprehensive income, primarily reflecting higher power-price assumptions and expected renewable demand growth.
- Operating cash flow improved substantially, while investing cash outflow increased to $5.066 billion from $2.544 billion, reflecting acquisitions and development investment. Financing cash flow was $3.489 billion.
Debt, liquidity and capital allocation
At year-end, corporate debt-to-capitalization at market value was 11% and consolidated debt-to-capitalization was 39%, compared with 8% and 33% in 2021. About 91% of consolidated borrowings were non-recourse. The company reported $444 million of its share of cash and cash equivalents, $211 million of marketable securities and $3.040 billion of available corporate and subsidiary facilities, totaling $3.695 billion of available liquidity. Proportionate debt had a weighted-average term of 12 years and a 4.9% average interest rate; 97% of proportionate debt was fixed-rate or hedged at year-end. These proportionate measures are non-IFRS.
The LP-unit distribution increased 5% to $1.28 annually in 2022. In February 2023, the partnership announced an increase to $1.35 annually. The stated long-term distribution-growth target is 5%–9%, supported by organic growth and operating initiatives; acquisitions are described as an additional opportunity, not a requirement for that target.
Outlook, commentary, risks and unusual items
- Management reported commissioning approximately 3,475 MW in 2022 and advancing more than 19,000 MW of renewable projects under construction. The renewable development pipeline was approximately 110,000 MW. The filing does not give a guarantee that pipeline projects will be completed or achieve expected returns.
- Management expects approximately 90% of 2023 proportionate generation to be contracted, with a 14-year weighted-average remaining contract duration. Contracted generation is not risk-free: counterparties, renewals, generation levels and market prices can affect results.
- The proposed Westinghouse acquisition, announced with Cameco and institutional partners for approximately $4.5 billion of equity investment, remained subject to closing conditions; closing was expected in the second half of 2023. Brookfield Renewable’s potential share was up to $750 million.
- In Q4, the partnership transferred a portfolio of investments with an approximate fair value of $388 million to a Brookfield affiliate for securities of equal value. Monetization of those securities depends on conditions and timing not assured in the filing.
- Principal risks include hydrology, wind and solar resource variability; power-price and recontracting exposure; inflation and higher interest rates; foreign-exchange movements; project construction and supply-chain costs; access to transmission; regulation and permitting; debt covenants and refinancing; and reliance on Brookfield, including conflicts of interest and allocation of investment opportunities.
- Brookfield’s management service costs were $243 million in 2022. The filing describes extensive related-party arrangements and notes that unitholders have limited voting rights and that the Managing General Partner controls distribution decisions.
- The auditor issued an unqualified opinion on the IFRS financial statements and internal controls. Management and the auditor excluded specified 2022 acquisitions from internal-control testing; those acquisitions represented about 5% of assets, 7% of net assets and 1% of revenue.
Important facts for investors to verify
- Reconcile the $138 million consolidated net income with the $295 million net loss attributable to unitholders, and understand the non-controlling-interest and other allocations.
- Review the FFO and Adjusted EBITDA definitions and reconciliations; neither is an IFRS measure or equivalent to cash available for distribution.
- Assess the assumptions behind the $3.745 billion asset revaluation, especially future power prices, discount rates, generation estimates and terminal values.
- Confirm debt maturities, covenant headroom, refinancing needs and the liquidity actually available to the partnership versus project subsidiaries.
- Track contracted generation, resource performance, project commissioning and cost progress, including the Westinghouse closing and conditions for monetizing the $388 million affiliate-exchanged securities.
- Review related-party fees, governance protections and the control and potential dilution implications of Brookfield’s ownership and exchangeable securities.