The video features a discussion on advancements in the renewable energy sector with Patrick DiCastri, CEO of Boralex, and Wyatt Hartley, CFO of Brookfield Asset Management's renewable power and transition team. Both leaders share insights into their respective companies, Boralex and Brookfield, emphasizing their roles within the renewable energy infrastructure across multiple regions, including North America and Europe. They also touch on the integration of various technologies such as wind, solar, hydro, and their expansion into storage and nuclear power services.

The conversation delves into the growing demand for renewable energy, particularly driven by technology and AI companies requiring infrastructure support. Wyatt Hartley explains how the market is now characterized by a corporate pull rather than government push, highlighting the extensive partnerships Brookfield has with large tech companies like Microsoft. Patrick DiCastri and Wyatt share the strategic importance of their customer relationships and the evolving nature of power purchase agreements (PPAs) along with market dynamics that necessitate different strategies and contract structures.

Please remember to turn on the CC button to view the subtitles.

Key Vocabularies and Common Phrases:

1. interconnection [ˌɪntərˌkəˈnɛkʃən] - (noun) - A connection linking two things together, specifically in the context of power systems, the connection between different systems or networks to share resources. - Synonyms: (linkage, connection, coupling)

...the limiter to new build is, is grid and interconnections.

2. holistic [həˈlɪstɪk] - (adjective) - Concerning or involving the whole or complete systems rather than analysis of, treatment of, or dissection into parts. - Synonyms: (comprehensive, all-encompassing, integrated)

...the ability for Brookfield to provide a holistic solution to the needs of these companies...

3. diverse [dɪˈvɜrs] - (adjective) - Showing a great deal of variety; very different. - Synonyms: (varied, assorted, mixed)

We're diversified across multiple technologies, hydro, wind, solar, more recently investing in batteries as well, and across multiple technologies.

4. hyperscaler [ˈhaɪpərˌskeɪlər] - (noun) - Large companies that dominate the cloud services space, providing computing power and data centers at a massive scale. - Synonyms: (cloud giants, mega-cloud providers, global cloud leaders)

And given what a news week we've had in the power industry with the hyperscalers coming in on nuclear.

5. leverage [ˈlɛvrɪdʒ] - (noun) - The ability to influence a system or environment in a way that magnifies the outcome. - Synonyms: (influence, advantage, authority)

The ability for Brookfield to provide a holistic solution to the needs of these companies is, is very differentiated.

6. augment [ɔːɡˈmɛnt] - (verb) - To make something greater by adding to it; to increase. - Synonyms: (enlarge, enhance, amplify)

And then AI obviously augments it and creates additional need

7. Rfp (Request For Proposal) [ɑːr ɛf piː] - (noun) - A document issued by a company or organization for the purpose of soliciting proposals from potential vendors to complete a specific project. - Synonyms: (tender offer, bid solicitation, proposal request)

No, it's driven by the real economy. Can you talk about just the relationship between your customers? Whether it's like, if the nature of the ppas are changing the tenors or what kind of role they're taking in like how you're structuring these deals.

8. sustainable aviation fuel [səˈsteɪnəbl ˌeɪviˈeɪʃən fjul] - (noun) - Fuel designed to power aircraft with reduced carbon emissions compared to traditional aviation fuel. - Synonyms: (eco-friendly jet fuel, green aviation fuel, cleaner airplane fuel)

...very small and prudent investments in carbon capture, sustainable aviation of fuel and biofuels.

9. amortize [əˈmɔrtaɪz] - (verb) - To gradually write off the initial cost of an asset over a period. - Synonyms: (depreciate, deplete, discount)

So we can amortize on the longer duration finance on the longer duration.

10. scope 2 [skoʊp tuː] - (noun) - As part of the greenhouse gas protocol, scope 2 emissions refer to indirect GHG emissions from the consumption of purchased electricity, steam, heat, and cooling. - Synonyms: (indirect energy emissions, secondary emissions, utility emissions)

So it's, the idea is to reduce the scope too.

Boralex, Brookfield Leaders on Renewable Energy Trends

Hi. Welcome to the advances in renewable energy panel. With me is Patrick DiCastri, chief executive officer of Boralex, and Wyatt Hartley, chief financial officer of the renewable power and transition team at Brookfield Asset Management.

To start off, why don't you just give us a little bit of background about yourselves to put everyone in the same room as you first. I am with Bahradex since 20 years, 23 years. Sorry, worked for Boralex 18 years in France. I was the first employee there and I moved to Canada five years ago. And tell us a little bit about Boralex. Like the mission? Yeah. Boralex is a renewable IPP. We are essentially, we have assets in Canada, in France, in the UK. We are building our first asset. We have a team there and growing there, and we are also in the US. So in wind, solar, small, hydro, and we're building large storage presently in Ontario.

Got it. Wyatt? Wyatt Hartley. I'm a managing partner at Brookfield. I've been with Brookfield for 15 years. Brookfield Renewable is a global owner and operator of renewable power assets. Primarily, we have 35 gigawatts of operating capacity, another 200 gigawatts of development pipeline. We're diversified across multiple technologies, hydro, wind, solar, more recently investing in batteries as well, and across multiple technologies. The majority of our business is in North America, but also a very big presence in Europe and some other areas in the world.

And then incrementally, we've also been investing into the energy transition. We own Westinghouse, which one of the largest global servicers, technology provider behind the nuclear sector, and then very small and prudent investments in carbon capture, sustainable aviation of fuel and biofuels. And given what a news week we've had in the power industry with the hyperscalers coming in on nuclear. Tell me about AI, Wyatt, and, like, what priority is that for you, and how are you chasing that?

Yeah, look, I think the, the way I would contextualize the AI demand and the hyperscaler demand is that ultimately these companies are becoming infrastructure companies, reluctantly, really, in the sense that they don't want to be infrastructure companies. They want to be technology companies who want to focus on their core product, but in order to ensure that their product gets to market, they have to ensure that the infrastructure exists. And the reality is the infrastructure does not exist right now, and they're having to build it out. And it's creating a very meaningful amount of demand, not only for renewable power, but broader infrastructure like data centers, semiconductors, what have you.

And from a Brookfield perspective, we're very lucky that we are positioned to be a servicer across all of those things. I work in the renewable power sector. I mentioned that we are a very meaningful developer of wind and solar, which is a product they require to build out their data centers incrementally. We own Westinghouse, which is going to service the existing nuclear power, will service their data centers. But in terms of servicing the incremental demand they have nuclear, as you referenced the news that has been discussed today and other announcements previously, that looks like it's going to be a big part of servicing that going forward.

But we're also, we also on the, in our infrastructure group, we are one of the largest owners of data centers globally. We have a partnership with Intel where we're providing capital to help them build out semiconductor capacity fabrication of those products in the US. So the ability for Brookfield to provide a holistic solution to the needs of these companies is, is very differentiated. And so we're fortunate enough to be one of the few partners that they could focus on globally to service those needs.

And we're lucky enough to have announced earlier this year, on the renewable power side of our business, a partnership to develop ten and a half gigawatts of wind and solar for Microsoft from 2026 to 2030. And that's just, you know, one of the partnerships that we have with the large hyperscalers, we have a number of other partnerships with the other guys, but ultimately we're quite confident that not only will we deliver that ten and a half gigawatts for them, but we're very uniquely positioned to deliver beyond that and again, across the multitude of services that they require.

And another one for you in terms of like AI and developing the renewable energy transition infrastructure for them, where are they in your priority? Are they the top priority now? Like, what did that compare to, like a couple years ago? Yeah, look, they've been a very meaningful priority for us for a while. You know, I feel like for the last three years I've been talking about the tech demand. And not only, I think the thing that I think is sometimes misplaced. It's not all AI. If you look at the power demand increase that these businesses have had over the last five years, which was really driven on the use of cloud and the digitalization of our economy, that trend will continue.

And then AI obviously augments it and creates additional need. So this is something we have been seeing and have been positioning our business accordingly for the last number of years. And it's really as these announcements over the last number, last year really, wherever we found that the market has really reacted to it. But our focus has been for a while. And, look, I think the easy way to contextualize it is all our customers are our priority. We've always been focused on ensuring that we are providing our corporate customers the best services that we can, because ultimately we're competing on a strategic capability we have not just the cost of capital.

And so those corporate customers are being critical for us. But in a market where for the first time in five to six decades, where electricity demand in the US, as an example, is seen very meaningful and sustained increases, and that's primarily being driven by the tech companies, of course that's going to be a priority for us as a business. And, Patrick, are you tempted to come to the US by, like, Chase AI or what are you seeing in your territory and where are you focusing?

Yeah, we are developing in the state of New York, specifically not chasing AI, but with the off taker, which is NySErda, it's the administration from the state of New York. It's a complex off taker, so it is a priority, but it's going slower than expected five years ago, where it's accelerating a lot. It's Quebec, Ontario, where if you go back three years ago in 21, in our strat plan, it was a small part of the growth and with different changes, which are essentially driven by the electrification of the industry, of transport and the growth of the economy.

Generally speaking, the plan of Hydro Quebec and the plan in Ontario, are you. We are speaking about 150 billion investment. So if we take a small part of it, it will be a big development for us in Quebec and Ontario. In Quebec, we have signed the last three years, we have signed 1.8 gigawatt of contract. We operate 3.1 gigawatt today. So it's very significant. In Ontario, we have signed a 0.5 gigawatt in storage. Again, there are other tenders coming, and our advantage there is the knowledge of the grid, the knowledge of the community, the knowledge of the First nations, and the fact that we are in this situation.

So it's a smaller number than obviously what Brookfield is doing, but it's interesting margin. And what has changed completely, I think, is if you go back five or ten years ago, renewable, were growing due to RFP, a niche created by government to reach target. No, it's driven by the real economy. Can you talk about just the relationship between your customers? Whether it's like, if the nature of the PPAs are changing the tenors or what kind of role they're taking in like how you're structuring these deals.

If that's changing, start. Patrick. Yeah, what we see, and it's different market by market. If we are, we are the largest independent player in France. And what we have old assets that I start in 2002, three, five. And so these assets have had a period of contract with EDF as an off taker came to an end. And then we're signing what we call Brownfield PPA. So this is three to five years contract. And what is driving the corporation to buy this electricity is to have green electricity without additionality. We are also signing Greenfield PPA for new assets in France.

We just announced one last week with Nestle for three sites. And this is Nestle is 15 years, sometimes it's 20 years. This is financial and this is with additional. So it's, the idea is to reduce the scope too. And this is what has driven the market today. And it's an option compared to the RFP from the government, from EDF and in Quebec it's still RFP from Naju, Quebec. But we went from 20 years contract to 30 year contract because of the duration. So we can amortize on the longer duration finance on the longer duration. There is project finance available for that.

So this is changing also the cost at the end for the customer. What about you, Wyatt? I mean you seem to indicate that the relationship with hyperscalers and maybe even other customers is changing. Yeah, look, I think Patrick said it really well. Where, to use the parlance that we use, is that it really our sector, the renewal sector, has gone from a government push. So RFPs contract for differences, government feed in tariffs, to one that is primarily driven by a corporate pull.

And as I mentioned, for us this has been a huge focus for our business because we just find as an organization we do a lot better working with corporates because it allows us to really bring a strategic element to the game and earn what we find a better risk adjusted return. And so from our perspective, we've been in this market for a long period, been developing relationships and really we've seen it augment and augment over the last number of years to where you're seeing it now, where we have close to 1000 customers across our portfolio. Around 30% of our generation currently is servicing commercial and industrial load by the end of the decade, within the next five years that will probably be more than 50%.

So just a sense of the majority of our growth is really focused on that commercial and industrial load. And I think to Patrick's point. It's not just for the green attributes. It's not just for energy security. It's driven by the economics that in the majority of markets, renewables are the lowest cost of bulk electricity available. And so when you have that behind your sector, that's a really powerful thing. And really that's why we've seen the kind of meaningful growth in our business and the amount of development we're doing.

In terms of the, your question around the contracts, and Patrick mentioned this from what we're seeing is there's no shortening of contracts because ultimately what we've seen from our customers is they want the lowest price they can get upfront. And what the trade off is, is a longer duration contract generally allows for a better financing package which allows a lower price to them upfront if you're, if you're selling back for the same returns.

So from a contract perspective, we're not seeing a shorter or riskier contract. It's more or less the same as what we've saw in our sector. Ten years ago. Yeah, I think a few years ago the push was for like maybe ten years, five years. But are you seeing more like 20, even 30 years? Like what's the sweet spot right now?

Yeah, look, from what we're seeing, it's dependent on market, it's dependent on customer. Like often what we are negotiating with our customer, when it comes down to it, is duration. They're not changing our price and they're saying, we'll give you an extra two to three years and that will make the math work in terms of solving back for the returns. So it's really driven by contract or driven by market, but we're generally seeing 20 years plus is the average duration.

Oh, go ahead. Maybe one thing which is illustrated by Wyatt is what has changed. In the past, the added value was developing the best project for the RFP of the government. And today it's really driven by the end. So the fact that we have commercial team who understand the real needs of the different customers in the different market and being able to change contract, we have, for example, in 2022, we have early terminated contract or 10% of our installed capacity in France just to switch from the regulated contract with EDF to other contract with another utility. And we have created a lot of value with that. We have never imagined that ten years ago.

So this is an example. So there is a lot of value in this part. When you're discussing with customers, they're all asking different things. Even if we are selling a commodity, they're asking for a. Another way to marketing, another way to guarantee the electricity, another way to be firm or not. And this is creating lots of value. If you can keep them in house, can you give us a sense of the economics!

Like, a few years ago, the PPAs were like low teen returns, or even single digits for solar and wind. And you saw power prices just kind of get down into the 30 $40 per megawatt range. What is it now, given supply chain issues and interest rates, what makes you comfortable?

Yeah, look, the way I would say it is, we've always allocated capital with a target return, equity return of twelve to 15%. And ultimately, for us to invest into development, where you are taking on a higher risk than buying operating assets, we're going to need to see a return at the high end of those returns. Five, six years ago, we weren't doing a lot of development. Now we're commissioning seven to ten gigawatts per year. And that's really driven by a better return environment that's within that range that I mentioned. And generally at the high end, it's the same situation.

If you look to in France, you can. On the last three years, the price, which is public, the average price of the tender, increased by 36% in the UK, in the last two years, it increased by 20%. I can say the same in Canada about the return. We are reaching this 12% return. And so it's interesting because it's completely different than when the price and the cost were going down. It was good. When you have an asset, you can refinance, you can do things, but at the end, you don't know where it would stop. No, it's completely different situation.

What is the biggest stumbling block to your growth or to your goals right now? I mean, there's a delay on transformers, there's a delay on getting, like, you're not developing gas, Patrick, but. Or maybe our gas, natural gas turbines. There's a long list. Labor is getting harder. What concerns you the most?

Maybe I start, I think, first, social acceptability. And I think and grid are the main long term, because you can do something on equipment delivery, the supply chain can improve. I think what is important is that the general population understand that it's no more a subsidized business that we have to do, because it's green. It's something that is important for the economy. And so this is important. So planning consent on grid planning consent on project, less recourse on project and transform.

What we have here in New York, we get contract, but we're not able to transform it into project because NySErDA is a little bit complex. And when I say we, it's the industry. Okay? So that is also something which is important.

Yeah. Look, from our perspective, we've really been focused on diversifying our business for a number of reasons. The primary being is that that really allows us to deliver the best product to our customer, given the specific needs they have. But it also means that we're in a fortunate position that there's nothing individual that really creates a concern from our business. So from a risk perspective, there's a lot of benefits.

I would echo what Patrick said though, is generally because every market is different, but across most markets, the limiter to new build is, is grid and interconnections. But look, that creates an opportunity where if you have projects that are well positioned in terms of, in the interconnection queues, that have affordable interconnections, that make your projects viable, there's huge value to that. And we're very fortunate that we've positioned our business so that we have those interconnection positions, those projects available in the most attractive markets around the world that are looking for corporate demand or that there is corporate demand. And so it creates a huge benefit for our business of having that.

Awesome. And I think we're just about out of time now. Thank you both, gentlemen, for sharing your thoughts, and let's keep the conversation going. Thank you.

Renewable Energy, Technology, Sustainable Development, Innovation, Business, Energy Transition, Bloomberg Live