Brookfield Renewable's Q3 2025 Earnings Call: Contradictions on Permitting Delays, Nuclear Support, and Data Center Power Opportunities Emerge as Executives Offer Conflicting Signals

Guidance:

• Delivering on a 10%+ FFO per unit growth target for 2025.
• First Westinghouse reactor projects expected to enter development within 1–2 quarters; revenues begin quickly but materially ramp over a 3–4 year period.
• Expect to execute another significant up‑financing in Q4 tied to recently contracted hydro RFPs.
• Long‑term target: 12%–15% total returns; development/construction projects targeted north of 15%.

Business Commentary:

• Financial Performance and Growth:
• Brookfield Renewable Power (BEP) reported FFO of $302 million for Q3 2025, or $0.46 per unit, marking a 10% year-over-year increase.

• This growth was driven by strong performance across its hydroelectric, wind, solar, and storage segments, along with the completion of strategic acquisitions and development projects.

• Nuclear Energy Expansion:

• BEP's partnership with the U.S. government is expected to facilitate the construction of at least 80 billion worth of Westinghouse nuclear reactors in the United States.

• The partnership aims to enhance Westinghouse's profitability and market presence, leveraging the company's leading position in nuclear technology and its global supply chain.

• Demand for Renewable Energy:

• BEP secured contracts to deliver 4,000 gigawatt hours per year of generation, reflecting ongoing demand for power across various markets.

• The growth is driven by factors such as electrification, reindustrialization, and the increasing power demand from hyperscalers in the technology sector.

• Strategic Investments and Asset Recycling:

• BEP closed a $2.8 billion agreement to sell and recycle assets, including a stake in a North American distributed generation business and a portfolio of U.S. operating assets.
• These strategic moves are part of BEP's focus on capital recycling to optimize asset value and reinvest in high-growth opportunities.

  Sentiment Analysis:

  Overall Tone: Positive

  • Management: "We had another strong quarter... generated $302 million of FFO... up 10% year‑over‑year." CEO: "We have never felt stronger about the growth prospects of our business." Commentary highlights large new Westinghouse partnership, $80B U.S. commitment, strong contract signings (4,000 GWh) and robust liquidity ($4.7B), supporting a positive outlook.

Q&A:

• Question from Nelson Ng (RBC Capital Markets): Are you seeing improvements in the pace of permitting at the state or federal level to speed power deployment?
  Response: Incremental improvement but not dramatic; intent to accelerate permitting exists and the primary bottleneck is on‑the‑ground execution rather than capital or demand.

• Question from Nelson Ng (RBC Capital Markets): Outside the U.S., which regions are you discussing additional power for data centers?
  Response: Data‑center demand discussions are global — largest in the U.S., then Western Europe — with activity also in Australia, India and South America; sovereign compute demand is rising.

• Question from Sean Steuart (TD Cowen): What's the expected timeline for the U.S. build‑out under the Westinghouse agreement and timing of FFO contribution?
  Response: Development work begins almost immediately (next 1–2 quarters); Westinghouse will generate early development revenues, with material ramp in ~3–4 years and highly profitable construction years spanning ~3–6 years.

• Question from Sean Steuart (TD Cowen): If Brookfield invests in Santee Cooper, how would you hedge basis risk for cost overruns or delays at the BEP level?
  Response: We'd only invest if appropriate downside protections exist; would structure deals to allocate/hedge construction and cost‑overrun risk so returns are risk‑adjusted and acceptable.

• Question from Robert Hope (Scotiabank): Could Brookfield/BEP be a capital provider for the build‑out and what framework/protections would you require to buy backstopped reactors?
  Response: BEP is well positioned to participate; would seek protections via sharing cost‑overruns with offtakers, suppliers or financing structures providing incremental liquidity and only invest with appropriate protections.

• Question from Robert Hope (Scotiabank): Why contract an existing hydro asset with Microsoft rather than build new wind/solar, and could more hydro deals with Microsoft follow?
  Response: The Microsoft framework always contemplated hydro; contracting hydro is consistent with demand for scale baseload power and further hydro deals are possible under the framework.

• Question from Mark Jarvi (CIBC): Under the U.S. government partnership, will the government assume all cost‑overrun and financing responsibilities, and have EPCs/utilities/off‑takers signaled support?
  Response: Under the partnership Westinghouse provides design/technology services only; cost‑overrun and financing risk sits with the U.S. government; stakeholder feedback has been constructive and supportive of participating with socialized protections.

• Question from Mark Jarvi (CIBC): Could the term sheet move to definitive buy‑in by year‑end or into early 2026?
  Response: Expect the process to conclude within ~90 days of the announcement, positioning completion around year‑end.

• Question from Mark W. Strouse (JPMorgan): Is the U.S. government commitment more to the $80B value than a fixed reactor count, and how should we think about that?
  Response: Agreement centers on ~$80B of initial reactor contracts; the government is focused on catalyzing a domestic supply chain and broader nuclear growth rather than a strict reactor count.

• Question from Mark W. Strouse (JPMorgan): What margins should we expect in Westinghouse's Energy Systems division across the development/construction lifecycle?
  Response: Historically the Energy Systems division runs around a ~20% margin during development/construction; scale from large orders should increase margins with ~20% as a floor.

• Question from Baltej Sidhu (National Bank of Canada): Any changes to eligibility of U.S. pipeline projects for federal tax credits and safe‑harbor status through 2029?
  Response: We have safe‑harbored our entire U.S. development pipeline through 2029 and are comfortable; FEOC definitions remain pending but are expected to be manageable and may favor large, integrated players.

• Question from Baltej Sidhu (National Bank of Canada): How are private market valuations trending relative to public markets for contracted renewables, and where will asset recycling focus be?
  Response: Private‑market valuations for contracted, high‑quality operating renewables are significantly higher than public markets; expect accelerated asset recycling in North America, Western Europe, Australia and India over the next 2–3 quarters.

• Question from Benjamin Pham (BMO): Over the next 5 years, how large could nuclear be as a percentage of the business and are there constraints on exposure?
  Response: No internal constraints — capital will be allocated where risk‑adjusted returns are best; Westinghouse/nuclear is ~5% of current FFO and can grow materially over time, though hydro remains north of 40% today.

• Question from Benjamin Pham (BMO): What return targets do you apply to nuclear/Santee and how do Westinghouse services factor into total returns?
  Response: BEP targets 12%–15% long‑term total returns; development/construction targets are north of 15% and nuclear investments would target meaningfully above the blended 12%–15%; Westinghouse services generate separate margins and are not blended with owner returns.

• Question from Benjamin Pham (BMO): Is nuclear dollar‑for‑dollar one of the highest‑reward opportunities today given expected returns and limited comps?
  Response: Management views nuclear as a high‑return, multi‑decade opportunity but will deploy capital only where attractive returns exist; ownership of Westinghouse and the U.S. partnership position the company to capture long‑term value.