While Brookfield Renewable Partners’ share price performance has been lacking, the firm offers significant growth potential in the expanding renewable energy sector. A massive Microsoft deal and strategic expansion into U.K. offshore wind demonstrate its ability to secure premium customers and enter high-growth markets.
The firm’s global presence, strong balance sheet, and positioning in the AI-driven power demand surge create multiple pathways for long-term value creation.
Meanwhile, the current market valuation offers an attractive entry point, with the stock inexpensive while maintaining its high dividend yield and consistent distribution growth.
BROOKFIELD RENEWABLE PARTNERS L.P. (Toronto symbol BEP.UN; www.bep.brookfield.com) owns 239 hydroelectric generating stations, 230 wind farms, 226 solar facilities, and 7,211 distributed generation and energy storage sites.
Brookfield cuts risk by selling power from its plants under long-term contracts. That provides stable cash flows.
For instance, the company in 2022 signed a 40-year power purchase agreement with Hydro Quebec for its 265-megawatt Lievre hydroelectric facilities.
The company also teamed up with Cameco Corp. (Toronto symbol CCO) to acquire nuclear power plant operator Westinghouse Electric Company. The partners paid $7.88 billion U.S. for the firm. Brookfield owns 51% of the partnership, with Cameco holding a 49% stake.
Notably, in November 2023, Saskatoon-based Cameco closed its partnership deal with Brookfield Asset Management to buy Westinghouse Electric Company.
Cameco contributed $2.1 billion for a 49% stake in Westinghouse, while Brookfield now holds a 51% stake.
To raise funds for the purchase, Cameco sold 34.1 million shares at $21.95 U.S. each for proceeds of $747.6 million U.S.
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Westinghouse employs about 9,000 people, and services approximately half of the nuclear power generation sector. The bulk of its revenue comes from recurring-revenue contracts, with about 85% of its clients having signed on for the long term.
The purchase will let Cameco—one of the world’s largest suppliers of uranium—capitalize on the full nuclear supply chain, rather than just being primarily a source of the base fuel.
Currently, because of continued volatility in uranium prices, Cameco plans to only produce uranium for customers that sign long-term contracts. However, the Westinghouse purchase will likely let it gain new contracts.
At the same time, Westinghouse itself could gain new customers going forward. Countries in Eastern Europe have had their reactors serviced by Russia’s Rosatom, but with the war in Ukraine, there’s a good chance they will be looking for a new company to handle those services.
In the quarter ended December 31, 2024, Brookfield’s revenue rose by 8.2%, to $1.43 billion from $1.32 billion a year earlier (all amounts except unit price and market cap in U.S. dollars). Cash flow per unit also rose, up 21.1% to $0.46 from $0.38.
Dividend Stocks: Brookfield’s record-breaking deal powers AI-driven expansion
In May 2024, Brookfield signed an agreement with Microsoft Corp. to deliver more than 10.5 gigawatts of additional renewable energy capacity over a five-year period to power its AI cloud services business.
Microsoft will sign firm contracts at prevailing power rates as the capacity is added. The new capacity is not in addition to Brookfield’s already targeted expansion plans, but it gives it a ready, high-credit-rated customer.
The deal is almost eight times larger than any other single corporate power-purchase agreement, and it may later be expanded to include new renewables capacity in Asia and Latin America.
The huge demand for power from Microsoft reflects surging demand for electricity to power the datacentres needed for burgeoning artificial intelligence applications.
The cost to build the new capacity could be as much as $11.5 billion. But Brookfield will be able to draw on its 60% owner, and leading investment firm, Brookfield Asset Management, for construction funds and expertise.
Meanwhile, the company is set to acquire a 12.45% stake in four operational U.K. offshore wind farms from Ørsted, marking its first investment in the U.K. offshore wind sector.
Denmark-based Ørsted is the world’s largest and leading offshore wind operator. Ørsted will continue to oversee the operations and maintenance of the wind farms.
The company will pay $770 million for its share of four U.K. offshore wind farms: Hornsea 1, Hornsea 2, Walney Extension, and Burbo Bank Extension. The four have a combined total capacity of approximately 3.5 gigawatts.
With the March 2025 payment, Brookfield raised your quarterly distribution by 5.1%. The new annual rate of $1.492 U.S. a unit yields a solid 6.3%. The partnership aims to raise the annual payment by 5% to 9% each year.
Recommendation in Canadian Wealth Advisor: Brookfield Renewable Partners L.P. is a buy.
