The decarbonization of the global economy continues to pick up speed. An increasing number of countries and companies are seeking out lower-carbon energy solutions to blunt the impact of climate change. They're also turning to lower-carbon energy for energy security and to help blunt the impact of commodity price inflation.
These catalysts are powerful growth drivers for Brookfield Renewable (BEPC 0.81%) (BEP 0.80%). They helped drive solid first-quarter results for the global renewable energy producer while bolstering its long-term growth prospects.
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Another excellent quarter
Brookfield Renewable generated $292 million, or $0.45 per share, of normalized funds from operations (FFO) in the first quarter, up 18% on a per-share basis. The company benefited from strong asset availability, higher power prices, and recent acquisitions.
The company's hydroelectric operations continue to deliver steady results. Growing demand for stable carbon-free baseload electricity is driving up hydroelectric power prices, especially as more intermittent renewable energy sources get added to the power grid. That's allowing Brookfield to secure attractive long-term contracts for its hydro assets.
Meanwhile, its wind and solar segments continue to perform well. They also generate relatively predictable cash flows backed by long-term contracts.
Finally, the company's distributed generation (i.e., power produced close to end users like rooftop solar), storage, and other segments are becoming increasingly important. A growing number of commercial and industrial customers are turning to Brookfield to help them achieve their decarbonization goals. Meanwhile, storage plays a crucial role in addressing the intermittency of renewables, providing Brookfield with opportunities to stabilize the grid and provide backup power.
Accelerating growth
Brookfield also continued to make excellent progress on its growth initiatives during the quarter. The company signed power contracts covering 1,400 gigawatt-hours (GWh) of clean energy per year, including 500 GWh by corporate customers.
These contracts are enabling the company to accelerate its development activities. Brookfield currently has 15 GW of projects under construction and in its advanced stage pipeline. These projects run the gamut of distributed and utility-scale solar, wind, storage, hydro, and green hydrogen projects. Brookfield expects them to add more than $150 million to its annual FFO once completed.
Brookfield also continues to expand its overall backlog. It now has 69 GW of development projects it's pursuing. That's more than triple its current 21 GW operating capacity. It recently added 22 GW of solar energy developments by closing its acquisition of Urban Grid. Meanwhile, it's working with a partner on securing two offshore wind farm developments in the Netherlands totaling 1.4 GW.
The company also agreed to invest a net $360 million across multiple transactions. Those investments included entering a new decarbonization asset class. Brookfield is investing in a leading North American modular carbon capture solutions provider. The company sees a significant opportunity to grow its carbon capture footprint in the coming years as it works to help companies decarbonize their operations.
Brookfield also continues to acquire renewable energy development projects. It agreed to purchase a 235-megawatt (MW) wind portfolio in Asia during the quarter for $90 million. The transaction consisted of 155 MW of operating assets and 80 MW of ready-to-build projects. This portfolio is part of a larger opportunity it has secured that features almost 700 MW of operating and construction-ready projects. Deals like this provide it with near-term cash flows from the operating assets and long-term upside from the development projects.
A powerful growth platform
Brookfield Renewable has built a leading global renewable energy platform. That's enabling it to generate a growing stream of cash flow. It's cashing in on accelerating demand for lower-carbon energy solutions, which is allowing it to capture higher power prices at its legacy operations while securing a growing pipeline of expansion projects. Because of that, Brookfield has plenty of power to continue growing its cash flow and dividend at attractive rates for years to come. That makes it stand out as an excellent way to invest in the global decarbonization megatrend.
