Brookfield Renewable (BEP 2.85%) (BEPC 2.75%) has been an early leader in the transition toward a lower-carbon energy future. The company has built a world-class portfolio of renewable energy assets through a series of acquisitions and development projects, giving it nearly unrivaled scale and operational expertise in its space. That early leadership has paid big dividends over the years. The company generated a market-mashing 91% total return in 2020 and has now produced annualized total returns of 20% since its formation two decades ago. 

However, as good as its past performance was, Brookfield's management believes even better days lie ahead. That was one of the key takeaways for investors listening to its fourth-quarter conference call.

A man in a green field with wind turbines in the background.

Image source: Getty Images.

A mammoth opportunity that's ripe for the taking

Brookfield CEO Connor Teskey led off the call by discussing what the company sees ahead. "We look forward to a multidecade opportunity to advance decarbonization and assist with the transition of global electricity grids to a more sustainable future," he said. "Advancing the transition to a lower-carbon future will require substantial capital, in excess of $100 trillion over the next three decades."

That's an enormous opportunity, and Brookfield believes it is ideally suited to capture a slice of it thanks to its "size, scale across multiple technologies, and depth of operating and development expertise." Teskey thinks these factors will be a "meaningful differentiator in sourcing growth opportunities."

That was certainly the case last year as Brookfield took advantage of several investment opportunities. Each of its acquisitions had a development component that will allow Brookfield to put its scale and expertise in operating and developing projects to work so it can generate higher returns on these investments than others could have earned.

Wind, solar, and energy storage in a field.

Image source: Getty Images.

The future is as bright as it has ever been

While the world's transition to cleaner, lower-carbon energy will take decades to complete, Brookfield has seen a noticeable uptick in its opportunity set over the past year. As Teskey stated on the call:

To put it very simply, our pipeline is as strong today as we've ever seen it before. We have the benefit of a massively growing renewables industry as more wind and solar is being added in every market around the world. We've got increasing opportunities to be a solutions provider to corporates and industrials and utilities that are looking to decarbonize. And at every opportunity, we're finding new ways to leverage our competitive advantages, our size, our scale, our operating and technical capabilities across new types of transactions.

In the last year alone, Brookfield has increased the size of its development pipeline from 13 gigawatts (GW) to more than 23 GW. To put that into perspective, Brookfield's current operating portfolio consists of 19 GW -- so it has enough projects coming down the pike to more than double its operations in the coming years without making any additional outside investments. 

However, the company is continuing to find new opportunities, and those are only likely to increase in the coming years. Teskey noted some of the factors driving the rapid rise in its opportunity set:

The growth potential we see in repowering, well, that's only going to accelerate going forward, given that the installed base of wind and solar did nothing but increase over the last 15 years. And therefore, on a lag basis, the repowering opportunities are going to increase over the next 15 years. Similarly, we're seeing growth in new asset classes that leverage renewable power and decarbonization solutions, whether it be green hydrogen or green data centers. And you can see through some of our contracting activities as well as some of the partnerships we've formed in the last six months. These are areas where we expect to be a significant player going forward...the growth opportunities we see today are bigger than they've ever been before.

Brookfield recently bought one of the largest onshore wind farms in the U.S., which it intends to repower by replacing some of the existing equipment with new components that will enable the project to generate 25% more electricity. Brookfield is one of the few companies equipped to take on a project of this size. It expects more wind repowering opportunities to emerge in the coming years, made possible largely by the significant advancements in wind technology that will enable those investments to earn strong returns.

Brookfield is also starting to see new types of opportunities emerge, such as supporting green hydrogen and green data centers. The company recently signed a deal with Plug Power (PLUG 4.02%) under which it will supply that company with 100% of the renewable energy it needs for its first green hydrogen plant. The two companies have discussed a larger partnership to pursue other green hydrogen solutions. Meanwhile, Brookfield has also made deals to supply renewable energy to data center operators, enabling them to go green. Both markets have significant growth potential given the data mega-trend and green hydrogen's potential as a carbon-free fuel source.

Decades of outperformance seem to be ahead

Brookfield has been cashing in on the steady transition to renewable energy for years. Now, it's in a prime position to benefit further as the shift picks up speed. The company has an increasing supply of growth opportunities that should power double-digit percentage earnings growth in the coming years. Add in its attractive dividend, and this stock should have the fuel to continue producing market-beating returns for decades to come. Because of that, Brookfield stands out as an excellent stock to buy and hold as the world's clean energy transition kicks into high gear.