Thank you for standing by, and welcome to the Brookfield Renewable Second Quarter 2025 Results Conference Call and Webcast. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Connor Teskey, CEO. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and thank you for joining us for our Second Quarter 2025 conference call. Before we begin, we would like to remind you that a copy of our news release, investor supplement and letter to unitholders can be found on our website. We also want to remind you that we may make forward-looking statements on this call. These statements are subject to known and unknown risks, and our future results may differ materially. For more information, you're encouraged to review our regulatory filings available on SEDAR, EDGAR and on our website. On today's call, we will provide a review of our second quarter performance. And then Wyatt Hartley, Co-President of Brookfield Renewable and Head of our North American business, will discuss our recently announced Hydro Framework Agreement with Google and how our strategic operating portfolio and deep capabilities across renewable technologies has positioned us as the partner of choice to the largest buyers of power globally. Lastly, Patrick will conclude our remarks by discussing our operating results and the strong financing environment that we are seeing for our business and our assets today. Following our comments, we look forward to taking your questions. We had a successful quarter, delivering strong financial results and executing on our business plans and growth initiatives. Our robust operating results were driven by our large hydro fleet, which is increasingly strategic in the current environment and the benefits of our development activities where over the past 12 months, we have commissioned 7.7 gigawatts of new renewable energy capacity globally. One highlight in the quarter was the strong results from our Nuclear Services business Westinghouse, as the momentum for nuclear power continues to build with Westinghouse well placed to benefit from continued growth in the sector given its global leadership position.…

Thank you, Connor, and good morning, everyone. This past quarter, we reinforced our position as the energy solutions partner of choice to the global technology players with the signing of a first-of-its-kind agreement with Google to deliver up to 3 gigawatts of hydroelectric capacity across the United States. This framework agreement follows on our landmark framework agreement with Microsoft that we signed last year to deliver over 10.5 gigawatts of renewable energy capacity and is a testament to our unique capabilities while also demonstrating our credibility with the largest buyers of power in the world. The agreement is also notable as it reflects a trend in how the hyperscalers are procuring power. Historically, they were focused on contracting new build, wind and solar. However, in the current environment, we have seen them extend their procurement of power to include hydro and nuclear generation at scale as a complement to their continued strong demand for low-cost and quick-to-market wind and solar. We have already signed the first two contracts under the Google Framework Agreement for 670 megawatts of capacity from our Holtwood and safe harbor facilities in Pennsylvania, securing 20-year contracts that deliver strong all-in prices and provide a near-term path to up financing, which will generate significant proceeds to deploy into further accretive growth. We also have another 300 megawatts of hydro capacity we are presenting to Google this year that we expect to contract at similarly attractive terms that should provide additional up-financing opportunities. For the remaining capacity under the framework agreement, we will explore additional contracting opportunities within our existing hydro fleet as well as to pursue potential new hydro investments. Stepping back, as Connor spoke to in his remarks, there is an incredible growth in energy demand that will require any and all solution to deliver the…

Thanks, Wyatt. And good morning to everyone on the call. Our business performed well this quarter, delivering funds from operations of $371 million or $0.56 per unit, an increase of 10% year-over-year driven by strong hydro generation and execution of our growth initiatives over the past year, which more than offset the impact of asset sales we completed in the last year. Our hydroelectric segment delivered strong growth with FFO up over 50% from the prior year on strong performance from our U.S. and Colombian fleets with hydrology that was above the long-term average. The outperformance reflects a rebound from a challenging prior year for hydrology and is in line with our expectation of a reversion to the mean over the long term. The strong performance for our hydros bodes well for our overall results in 2025 and going into 2026, given the typical multiyear cycle we see in the hydrology of our fleet. Our wind and solar segments performed well with FFO essentially flat compared to the prior year. As newly commissioned capacity and the closing of our investment in National Grid's renewables business in the U.S. during the quarter, was offset by lower FFO due to asset dispositions and gains on the sale of development assets in the prior year. Our distributed energy, storage and sustainable solutions segments delivered strong performance with FFO up almost 40% year-over-year, driven by strong results from Westinghouse. As the business continues to benefit from the growing global demand for nuclear energy. Turning to our financial position. We ended the quarter with $4.7 billion of available liquidity across the business. providing strong financial flexibility for the franchise. Our balance sheet continues to be top tier in the sector, and we remain committed to a prudent financing approach, enabling us to pursue growth opportunistically.…

And our first question comes from the line of Nelson Ng from RBC Capital Markets.

Congrats on a strong quarter. So the first question is like, I think it's already well known that there is a big demand for power and the lack of supply. But in light of the results from the recent PJM auction and the high capacity payments, are you able to accelerate the pace of development in that area? Or are you making any changes in, in the U.S.? And are you able to further kind of leverage your footprint in that region? .

And thanks for the question, Nelson. In terms of what we saw recently in the capacity auction in PJM, we would simply say it's indicative of that supply-demand imbalance that we're seeing in most of the regions we operate around the world, just with the capacity auction, the results get published, it creates a really formal portrayal of a dynamic we've been seeing on the ground in a number of places that we think is going to continue for years to come. In terms of how we leverage our existing position and look to pull things forward, two comments to be made there. Make no mistake, in this market where there is a supply-demand imbalance the shortage is not capital. The shortage is not demand. The shortage is having available to build projects and we are tackling this three ways. One, everything we can, we are pulling forward as quickly as possible. That has very much been true for a couple of years now, and we'll look to continue to be true for the foreseeable future. Secondly, we will continue to use our M&A capabilities and our access to capital to add more projects and more pipeline in the regions where we are seeing the greatest amount of demand. And then thirdly, I would highlight our framework agreements and partnerships with the largest buyers of power around the world because what those partnerships allow us to do is get a very intimate knowledge of where those buyers of power where their future needs are. And really, what it does is it gives us a hunting license, if you will, to either develop or acquire with greater confidence in regions where we essentially know there is a backstop level of demand. And therefore, we're already pulling everything forward as fast as possible, but we're looking to use the growth levers as our franchise to look to do more in those markets where we see that supply demand imbalance persisting in the longer term.

So just to follow up on that. I noticed in your development pipeline that the amount of projects being commissioned in North America in 2025 is, I think, roughly 2.7 gigawatts that reduces a little bit to 2.4 in '26, and then it more than doubles to 5.4 gigawatts in 2027. Is that just purely timing? Or are there kind of other forces at work in terms of that profile.

That's purely timing. Our development pipeline is made up of -- I'll start and if Wyatt wants to add anything he can. But our pipelines that we produce in our supplemental are really backed by list of specific projects that have various interconnection and COD dates. I make no mistake, if you were to draw a trend line across our North American region. It is very consistently kind of up and to the right, but the specifics of one year to the next are based on the individual underlying projects and when they're going to come online.

Okay. Got it. And then just one last question. Just based on your discussion with big tech companies and the big hyperscalers, like how do they balance the need for base load versus intermittent renewable energy .

The large technology companies are undoubtedly the largest buyers of power and are certainly ones who are adding the incremental marginal demand due to the growth of AI and the growth of the data center fleet around the world, but particularly in the U.S. And therefore, they without a doubt, are looking to secure as much generation as possible. And while we often talk about them as a specific industry, the point we would make is the demand is broad-based. It's driven first and foremost by the tech companies, but we're seeing this across all segments of the economy. The second point we would make is we are seeing an absolutely growing sophistication and increased demand for things beyond what I will say, pay-as-produced generation. And we absolutely encourage this and think it puts Brookfield in a fantastic situation. We're seeing more demand for 24/7 power. We're increasingly seeing contracts that used to be pay-as-produced generation -- now the offtakers want the power and the REX. Increasingly, now we're seeing the contracts include the capacity component that comes with some of these revenues and some of these assets. And all of that plays to our strengths given our diversity across technologies and in particular, our large flexible operating base that can be mixed with I'll call it, vanilla wind and solar to meet these evolving demands of the market. So absolutely, it is increasing. We actually encourage it and view it as a very important way that Brookfield Renewable will continue to differentiate itself.

And our next question comes from the line of Sean Steuart from TD Cowen.

First question, Connor, you touched on feeling pretty good about your U.S. pipelines tax credit eligibility through 2029. And I guess the question is, I suppose that's the read relative to the reconciliation bill. Do you have any thoughts on the Trump's executive order? And if any potential changes to FIAC criteria might change the parameters of, of tax credit eligibility for your pipeline?

So we continue to monitor the review that's ongoing. We feel very comfortable with our position. And perhaps more importantly, if anything unexpected came out of that review, we are extremely confident that we are as well positioned as anyone else or best positioned to leverage our global supply chain and our different relationships to evolve as needed. And we stand here very confidently that we will be able to secure tax credit eligibility for essentially the entirety of our U.S. pipeline out through the end of the decade. Sean, I don't know if this was part of your question, but -- after -- you mentioned we focus on out to 2029. The important thing within our business to recognize is as we have seen in recent years, -- there is -- due to the supply imbalance we are seeing in the market, we are able to pass through any changes in construction costs up or down, whether that be CapEx costs, whether that be the inclusion or removal of tax credits, whether that be funding costs. We've been able to push that through to the end customer by changing the price of the PPA. We've been able to push through cost decrease as well as cost increases always well preserving our development margin. The one place that we're very, very constructive is because of the visibility out to 2029, that gives the market and ourselves as a developer more than enough time to include any price increases as needed for projects out more than 5 years away now. And really what it gives us confidence is within our U.S. business, we'll be able to preserve our development margins for the foreseeable future.

That's useful. Second question for you, Connor, for Wyatt. -- to fulfill the full 3 gigawatts under the Google framework agreement, you touched on it would require some M&A. And I'm wondering if you can speak to the hydro M&A environment in the U.S. right now. And how you expect to navigate that opportunity set going forward?

So we're actually seeing the hydro market after I would say, an extended period of inactivity becoming more and more liquid. And obviously, hydro are scarce assets. But it's also hydro operating capabilities are scarce as well. And we've been buyers, owners, operators of hydros for 4 decades. And really, I'll use the same word again. What our arrangement with Google does is it gives us a hunting license, if you will, to pursue opportunities in hydro when they become available when they fit the parameters of that framework, we can pursue those opportunities with confidence. And one thing we would highlight is there is the opportunity, but not the obligation to deliver those incremental megawatts. So we will continue to be disciplined. But I would say it's certainly another competitive advantage for us as we look to grow our strategy.

Yes. And Sean, it's Wyatt here. The only thing I would add is, look, like with that additional capacity -- it could be that it's all fulfilled with our existing fleet. We do have that capacity that is available to contract. Really, it's just a matter of -- is it in the right region that Google would want it as an offtake. So it's not to say that it requires us to do M&A to fulfill it. It's just we have the optionality, right? And it's really predicated on meeting the needs of Google and working with them over the next number of years to figure that out, but we have the option of the existing fleet or to use it for M&A.

[Operator Instructions] Our next question comes from the line of Mark Jarvi from CIBC.

Just coming back to the conversation around PJM. The pricing signals are very encouraging, but it also represents the fact where it's harder to get assets through the interconnection in [ Permian ]. So I'm just thinking how you guys are adapting some of the challenges in the U.S. market and talking to your large customers. Are you starting to prioritize other regions where transmission, land procurement, ability to build is easier? Like are you shifting to places like Texas where some of the gigawatt scale data center complexes are trying to push forward? .

Mark, thanks for the questions. If I could perhaps answer back to you, the comment I would say is we continue -- it's not that we're starting. We continue to take into account speed of connection into our development activities and our interactions with our customers. Take a market like PJM I know it's a little bit dated now, but we bought a platform Urban Grid, a number of years ago, purely because it had such preferential interconnection queue positions in an increasingly congested market. So I would say it's not a realization of a problem and a reaction to pursue elsewhere. It's a recognition of a dynamic that has been ongoing and will continue to exist and simply including that in both how we grow inorganically through M&A and how we look to develop as we look to meet the growing needs of our customers. It's something we've been doing for years and that we'll continue to do. Make no mistake about it. You can't start a project in some markets right now and expect it to COD for a customer anytime in the near term.

Something like the Urban Grid platform, is that something you can continue to lean on? Or have you sort of exhausted, but largely taking advantage of their preferential interconnection queue and siding positions. Or is that a business that continues to create more upside on the competitive advantage in the PJM market for now?

Even less specific to Urban Grid, I think buying businesses and development platforms that take into account and have really good knowledge of how interconnection grids work, how queue positions will be -- how queue positions will be turned into pulling assets out of the ground. Those capabilities are recurring. We felt in that example that we were buying an underappreciated asset because of their existing connections, but that and our other platforms continue to add pipeline in the highest value markets across the United States. And that's what gives us that pipeline of being able to pull multiple thousand megawatts out of the ground each year. It's really based on decisions and positions that we took years ago.

Okay. And then maybe turning to Europe. It seems like a cost decline on batteries and solar create some tailwinds on the economic case for deployment there. We've heard some other developers ramp-up activity just with Neoen and other platforms you have in Europe, are you able to grow faster on the organic side? Or is M&A something you'd have to look to more in Europe to take advantage of potential economic tailwinds there?

The comment about batteries, battery CapEx costs have gone down more than 60% in the last 24 months, while at the same time, increasing renewable penetration has created the need for more grid-stabilizing services, you have a dynamic where costs are going down at the same time as revenues are going up in almost every market around the world. And therefore, the commercial case, the economic case for batteries is pretty incredible today in most markets we look at. And therefore, across every single development platform at Brookfield, we have implemented a battery strategy over the last 12 months. We are, of course, doing things to supplement that, looking at either battery acquisitions or platforms that do focus on energy storage and that was undoubtedly a key feature of the acquisition of Neoen, which is the largest utility scale battery developer in the world. The one point we would highlight about Neoen is well they are a French company headquartered and they -- we privatize them off the French Stock Exchange -- they are a very global developer in terms of where their operations are. And we're certainly leveraging that to drive organic growth in areas outside of Europe as well.

So if you say today where you think the best rate of change in terms of growth on batteries can really accelerate development activities or capital deployment activities, how would you rank to the markets that are really starting to lead your focus right now? .

If I could frame it slightly differently, I think this will be helpful. Batteries are the fastest-growing technology within our platform today. In terms of areas where we are seeing batteries deployed at scale. Candidly, I think the U.S. would probably still be #1 for us, but we continue to see opportunities in other markets, in particular areas where there's very high radiation and very high renewables penetration. So parts of the U.S., obviously fit that bill. Australia obviously fits that bill. Places in Europe, storage is increasingly becoming of interest in Southern Europe. The other place that I would highlight is we're actually seeing a growing number of opportunities in the Middle East as well. .

And given that economic case, would batteries be at the top end of your target IRR range for now?

Yes, absolutely. It probably won't stay there forever. But right now, the returns on batteries are very attractive.

And our next question comes from the line of Mark Strouse from JPMorgan.

Just I wanted to ask a couple of points on your safe harbor business, Connor. Just given kind of the July 7 executive order and potential changes to safe harbor, we'll find out what treasury says here in the next couple of weeks, hopefully. I'm curious, you talked about the -- your safe harboring nearly all of your U.S. projects through year-end '29. Are you able to say how much of that was safe harbored in 2024 and prior? Just our understanding is that the the potential rule change is going to be for 2025 and beyond safe harbors, if there's going to be any change. So kind of breaking that down? And then secondarily, how are you thinking about that in 2025 kind of weighing spending money now to lock in your credits to the extent that you can maximize that. But on the other hand, not looking to overspend in the event that rule changes are draconian.

So a few things to unpack there. What I would say is in terms of our safe harbor strategy for our U.S. platform. As mentioned, we have an expectation that we will be able to safe harbor almost all of that -- the vast majority of that is done. I can't tell you a specific as of what date, but the vast majority of it is already completed and some of the components of our pipeline where it's not completed are things that maybe don't need safe harboring, i.e., some of our battery projects and things like that, which had more favorable treatment under the latest rules. The -- in terms of your comment just around the process used to execute our safe harboring strategy. The point we would make there is we obviously want to remain very true to our approach of only putting capital in the ground when we can lock in both revenues and costs at the same time. That has served us very well across cycles, and we want to stay true to that. So when we look to execute this safe harbor strategy, we look to do it first and for by using the offsite on-site physical work test, approach and only secondly, by pulling forward CapEx. And therefore, the way we do that only requires a modest amount of CapEx than it otherwise would have. It's in the grand scheme of our total organic development spend, the cost of safe harboring, the incremental cost of pulling forward CapEx to safe harbor of these projects is not particularly material.

And our next question comes from the line of Jon Windham from UBS.

I would just be interested in hearing your thoughts on what the key milestones are over the next year for nuclear development, things we should keep an eye on for the Westinghouse business. .

So in terms of the Westinghouse business and perhaps I'll start and then why it the developments in the U.S. are certainly the most interesting, so perhaps hand to you. But the way to think about our Westinghouse business is when we made the investment, we -- we really think of it as 2 components. One, it has an existing product services and technical capabilities to the existing nuclear operating fleet around the world and that provides incredibly long-term stable inflation-linked cash flows as nuclear reactors simply run, refuel, refurbish lifetime extensions, things like that. And all of that is, of course, trending in the right direction right now given the existing nuclear fleet around the world. What is the new dynamic that has accelerated in the last 3 to 4 years is new build nuclear. And the joy for Westinghouse is it plays an absolute leadership role in that activity as well. That's new build of large reactors, SMRs or even micro reactors as well. And what we're seeing around the world is governments and corporates increasingly looking to large-scale nuclear to meet their electricity and their baseload demand. And in particular, we're seeing that activity most dramatic, I would say, in Europe and the United States. And what you saw in our results this quarter is while the ongoing business, the core services business of Westinghouse is very, very stable and growing as we do more Westinghouse activities related to the growth of new nuclear, that will provide significant upside in our financial results as they execute on some of those types of activities. And it was certainly growth of new nuclear in Europe that drove the successful outperformance this quarter. In terms of key milestones, while I'll hand to you, but I do think that the one to look for is growth in the United States as the government has been very vocal about their intention to start the build of 10 new reactors before the end of the decade, with Westinghouse as the U.S. nuclear technology in the global champion, it certainly looks to be on the front foot of that. And we would expect that demand to come from both governments and from corporates which is probably the most notable inflection change we're seeing in the industry. Wyatt, anything you'd add to that?

Look, I would just reemphasize that last point about the U.S. As Connor mentioned, we're seeing very meaningful demand on a global basis. Westinghouse has made very good progress in Europe as an example, where we're advancing projects in Poland. There's very forward momentum in Bulgaria. We have a project or we have our technology -- underlying technology is being used in the Czech Republic. So there is very good progress on a global basis. But as Connor mentioned in the U.S. is where we see a very meaningful focus out of the current administration. Recently, there was an executive order that was issued where with the goal of starting construction, as Connor mentioned, on 10 gigawatt scale reactors by the end of the decade. And really where that position Westinghouse is probably the most credible provider of that underlying technology is it really positions that Westinghouse very meaningfully to benefit from that. And as you may have seen around the energy innovation summit that was recently held in Pennsylvania, where President Trump and the Senator of Pennsylvania attended, the focus around those 10 large-scale gigawatt reactors is critical to the administration's goal of being a leader in AI. And so from that perspective, the business as well as the shareholders being both Brookfield and Cameco, our partner in the investment are working very closely with the various stakeholders. And you can imagine that's a mix of government, that's a mix of utilities as well as the offtakes and primarily at the hyperscalers, but we are working very meaningfully to be able to bring forward something in the very near term that should give you a sense of what that could translate to in terms of Westinghouse and then the broader benefit to Brookfield.

And our next question comes from the line of Jessica Hoyle from Scotiabank.

So just to start, you touched on this a little bit, but just given the CapEx increases that we're seeing from the tech companies, -- how have discussions regarding new facilities or contractual frameworks changed in recent months. .

Perhaps the thing that is most notable to us, we're going to sound like a broken record is the numbers and the quantum and the demand simply continues to go up. But maybe there's 2 or 3 things to highlight. One, we're seeing much more increased appetite for new technologies beyond just wind and solar. Our hydro framework is certainly illustrative of that and no doubt in relation to the previous question, the conversations around nuclear are certainly accelerating. The other point that is really showing up out of these conversations is the importance that the large tech companies, the hyperscalers are putting on broader relationships. Make no mistake that the procurement of power is now undoubtedly the bottleneck on the critical path to growth for their cloud and AI businesses. And they don't -- they increasingly want to look to derisk that growth path by partnering with the largest and most capable counterparties -- and therefore, when we talk about something like our hydro framework with Google, while the framework in itself is exciting, it is important to recognize that it is simply one component of an increasingly broad and integrated relationship that spans wind, solar. We have retail power agreements with some of the tech companies. Those relationships are becoming much larger and much more integrated. That's probably the biggest change we've seen in recent months.

And then can you talk a little bit about whether the changes in tax credits have altered the M&A market for renewable developers, specifically in the U.S. .

It's an interesting question because we would highlight that -- we completed a transaction earlier this year, acquiring a platform of national grid in the United States that we're absolutely thrilled about and really reinforces some of the messages we've been making on this call about buying high-quality developers with advanced pipelines in the key regions around the United States. What's interesting is M&A activity in the U.S. has been a little bit subdued year-to-date, and we would chalk that up mostly just to some of the market noise and uncertainty around the timing of new regulation and tax regimes and executive orders and reviews. We very much expect there to be a very significant increase in M&A activity within the power space in the renewable power space in the United States over the next 12 months. We see huge demand for power, which means huge demands for CapEx, which many of the existing platforms very simply don't have access to capital to fund -- and therefore, we do see a pretty large pipeline of M&A developing that we are certainly excited to review and participate in when it makes sense for our business.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Connor Teskey for any further remarks.

Thank you very much for joining our call and your interest in support of Brookfield Renewable. We look forward to updating you on our Q3 results in 3 months' time, but hopefully, we'll speak to you at our Investor Day at the end of September. Thank you, and have a great day. .

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.