PROPERTY, PLANT AND EQUIPMENT

12 Months Ended

Dec. 31, 2022

Property, plant and equipment [abstract]

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

The company’s PP&E relates to the operating segments as shown below:

	Renewable Power and Transition (a)				Infrastructure (b)				Real Estate (c)				Private Equity and Other (d)				Total
AS AT DEC. 31 (MILLIONS)	2022		2021		2022		2021		2022		2021		2022		2021		2022		2021
Costs	$	34,483	$	30,588	$	39,440	$	39,769	$	15,367	$	11,568	$	23,024	$	21,083	$	112,314	$	103,008
Accumulated fair value changes	30,726		28,138		3,251		3,077		1,794		881		(841)		(1,022)		34,930		31,074
Accumulated depreciation	(9,966)		(8,409)		(5,398)		(4,191)		(1,799)		(1,481)		(5,813)		(4,512)		(22,976)		(18,593)
Total1	$	55,243	$	50,317	$	37,293	$	38,655	$	15,362	$	10,968	$	16,370	$	15,549	$	124,268	$	115,489

1.As at December 31, 2022, the total includes $5.6 billion (2021 – $5.8 billion) of PP&E leased to third parties as operating leases. Our ROU PP&E assets include $435 million (2021 – $415 million) in our Renewable Power and Transition segment, $3.5 billion (2021 – $4.0 billion) in our Infrastructure segment, $1.0 billion (2021 – $986 million) in our Real Estate segment, and $1.7 billion (2021 – $1.6 billion) in our Private Equity and other segments, totaling $6.6 billion (2021 – $7.0 billion) of ROU assets.

Renewable Power and Transition, Infrastructure and Real Estate segments primarily carry PP&E assets at fair value, classified as Level 3 in the fair value hierarchy due to the use of significant unobservable inputs when determining fair value. The carrying amount that would have been recognized had our assets been accounted for under the cost model is $75.4 billion (2021 – $72.0 billion). Private Equity and other segments carry PP&E assets at amortized cost. As at December 31, 2022, $88.2 billion (2021 – $66.2 billion) of PP&E, at cost, were pledged as collateral for the property debt at their respective properties.

a)    Renewable Power and Transition

Our renewable power and transition PP&E consists of the following:

	Hydroelectric				Wind				Solar and Other				Total
AS AT AND FOR THE YEARS ENDED DEC. 31 (MILLIONS)	2022		2021		2022		2021		2022		2021		2022		2021
Cost, beginning of year	$	13,871	$	13,899	$	9,033	$	8,398	$	7,684	$	6,541	$	30,588	$	28,838
Additions, net of disposals and assets reclassified as held for sale	(542)		734		950		(907)		1,267		648		1,675		475
Acquisitions through business combinations	—		—		1,765		1,643		1,321		723		3,086		2,366
Foreign currency translation	(849)		(762)		156		(101)		(173)		(228)		(866)		(1,091)
Cost, end of year	12,480		13,871		11,904		9,033		10,099		7,684		34,483		30,588
Accumulated fair value changes, beginning of year	23,973		19,865		2,461		2,908		1,704		1,465		28,138		24,238
Fair value changes	2,681		4,581		1,060		(44)		162		282		3,903		4,819
Dispositions and assets reclassified as held for sale	—		—		(135)		(354)		—		—		(135)		(354)
Foreign currency translation	(1,012)		(473)		(133)		(49)		(35)		(43)		(1,180)		(565)
Accumulated fair value changes, end of year	25,642		23,973		3,253		2,461		1,831		1,704		30,726		28,138
Accumulated depreciation, beginning of year	(5,151)		(4,731)		(2,086)		(2,293)		(1,172)		(846)		(8,409)		(7,870)
Depreciation expenses	(624)		(556)		(557)		(599)		(413)		(355)		(1,594)		(1,510)
Dispositions and assets reclassified as held for sale	86		22		4		792		7		1		97		815
Foreign currency translation	125		114		(222)		14		37		28		(60)		156
Accumulated depreciation, end of year	(5,564)		(5,151)		(2,861)		(2,086)		(1,541)		(1,172)		(9,966)		(8,409)
Balance, end of year	$	32,558	$	32,693	$	12,296	$	9,408	$	10,389	$	8,216	$	55,243	$	50,317

The following table presents our renewable power and transition PP&E measured at fair value by geography:

AS AT DEC. 31 (MILLIONS)	2022		2021
North America	$	37,016	$	32,629
Colombia	8,264		8,497
Brazil	4,708		3,547
Europe	3,396		3,935
Other1	1,859		1,709
	$	55,243	$	50,317

1. Other refers primarily to China, India and Chile.

Renewable power and transition assets are accounted for under the revaluation model and the most recent date of revaluation was December 31, 2022. Valuations utilize significant unobservable inputs (Level 3) when determining the fair value of renewable power and transition assets. The significant Level 3 inputs include:

Valuation Technique	Significant Unobservable Inputs	Relationship of Unobservable Inputs to Fair Value	Mitigating Factors
Discounted cash flow analysis	•Future cash flows – primarily impacted by future electricity price assumptions	•Increases (decreases) in future cash flows increase (decrease) fair value	•Increases (decreases) in cash flows tend to be accompanied by increases (decreases) in discount rates that may offset changes in fair value from cash flows
	•Discount rate	•Increases (decreases) in discount rate decrease (increase) fair value	•Increases (decreases) in discount rates tend to be accompanied by increases (decreases) in cash flows that may offset changes in fair value from discount rates
	•Terminal capitalization rate	•Increases (decreases) in terminal capitalization rate decrease (increase) fair value	•Increases (decreases) in terminal capitalization rates tend to be accompanied by increases (decreases) in cash flows that may offset changes in fair value from terminal capitalization rates
	•Terminal year	•Increases (decreases) in the terminal year decrease (increase) fair value	•Increases (decreases) in the terminal year tend to be the result of changing cash flow profiles that may result in higher (lower) growth in cash flows prior to stabilizing in the terminal year

Key valuation metrics of the company’s hydroelectric, wind and solar generating facilities at the end of 2022 and 2021 are summarized below.

	North America		Brazil				Colombia				Europe
AS AT DEC. 31	2022	2021	2022		2021		2022		2021		2022		2021
Discount rate
Contracted	4.9 – 5.4%	4.1 – 4.4%	8.2	%	7.2	%	8.5	%	7.9	%	4.4	%	3.9	%
Uncontracted	6.2 – 6.7%	5.4 – 5.6%	9.5	%	8.5	%	9.7	%	9.2	%	4.4	%	3.9	%
Terminal capitalization rate1	4.3 – 4.9%	4.8 – 5.1%	n/a		n/a		7.7	%	8.0	%	n/a		n/a
Terminal year	2044	2042	2051		2048		2042		2041		2036		2036

1.    Terminal capitalization rate applies only to hydroelectric assets in North America and Colombia.

Terminal values are included in the valuation of hydroelectric assets in the U.S., Canada and Colombia. For the hydroelectric assets in Brazil, cash flows have been included based on the duration of the authorization or useful life of a concession asset  without consideration of potential renewal value. The weighted-average remaining duration as at December 31, 2022, which includes a one-time 30-year renewal for applicable hydroelectric assets completed in the current year, is 35 years (2021 – 31 years). Consequently, there is no terminal value attributed to the hydroelectric assets in Brazil.

Key assumptions on contracted generation and future power pricing are summarized below:

AS AT DEC. 31, 2022	Total Generation Contracted under Power Purchase Agreements				Power Prices from Long-Term Power Purchase Agreements (weighted average)		Estimates of Future Electricity Prices (weighted average)
	1 – 10 years		11 – 20 years		1 – 10 years	11 – 20 years	1 – 10 years	11 – 20 years
North America (prices in US$/MWh)	54	%	16	%	88	74	93	135
Brazil (prices in R$/MWh)	75	%	43	%	336	387	290	387
Colombia (prices in COP$/MWh)	32	%	2	%	293	352	376	554
Europe (prices in €/MWh)	90	%	65	%	72	66	62	74

The company’s estimate of future renewable power pricing is based on management’s estimate of the cost of securing new energy from renewable sources to meet future demand between 2026 and 2035 (2021 – between 2025 and 2035), which will maintain system reliability and provide adequate levels of reserve generation.

b)    Infrastructure

Our infrastructure PP&E consists of the following:

	Utilities				Transport				Midstream				Data				Sustainable Resources and Other				Total
AS AT AND FOR THE YEARS ENDED DEC. 31 (MILLIONS)	2022		2021		2022		2021		2022		2021		2022		2021		2022		2021		2022		2021
Cost, beginning of year	$	7,582	$	9,306	$	8,999	$	8,698	$	14,862	$	4,321	$	8,324	$	8,593	$	2	$	294	$	39,769	$	31,212
Additions, net of disposals and assets reclassified as held for sale	345		(1,788)		642		312		780		511		561		(103)		—		(294)		2,328		(1,362)
Acquisitions through business combinations	108		180		—		134		—		9,865		53		—		—		—		161		10,179
Foreign currency translation	(743)		(116)		(356)		(145)		(963)		165		(754)		(166)		(2)		2		(2,818)		(260)
Cost, end of year	7,292		7,582		9,285		8,999		14,679		14,862		8,184		8,324		—		2		39,440		39,769
Accumulated fair value changes, beginning of year	1,626		2,917		1,045		1,047		408		338		—		—		(2)		324		3,077		4,626
Disposition and assets reclassified as held for sale	—		(1,399)		—		—		—		—		—		—		—		(244)		—		(1,643)
Fair value changes	176		134		112		48		118		70		—		—		—		(80)		406		172
Foreign currency translation	(178)		(26)		(53)		(50)		(3)		—		—		—		2		(2)		(232)		(78)
Accumulated fair value changes, end of year	1,624		1,626		1,104		1,045		523		408		—		—		—		(2)		3,251		3,077
Accumulated depreciation, beginning of year	(1,272)		(1,613)		(1,668)		(1,404)		(622)		(356)		(629)		(263)		—		(35)		(4,191)		(3,671)
Depreciation expenses	(326)		(352)		(468)		(481)		(418)		(270)		(384)		(419)		—		(4)		(1,596)		(1,526)
Dispositions and assets reclassified as held for sale	21		682		9		161		11		20		41		45		—		38		82		946
Foreign currency translation	121		11		87		56		47		(16)		52		8		—		1		307		60
Accumulated depreciation, end of year	(1,456)		(1,272)		(2,040)		(1,668)		(982)		(622)		(920)		(629)		—		—		(5,398)		(4,191)
Balance, end of year	$	7,460	$	7,936	$	8,349	$	8,376	$	14,220	$	14,648	$	7,264	$	7,695	$	—	$	—	$	37,293	$	38,655

Infrastructure’s PP&E assets are accounted for under the revaluation model, and the most recent date of revaluation was December 31, 2022. The utilities assets consist of regulated transmission and regulated distribution networks, which are operated primarily under regulated rate base arrangements. In the transport operations, the PP&E assets consist of railroads, toll roads and ports. PP&E assets in the midstream operations are comprised of energy transmission, distribution and storage. Data PP&E include mainly telecommunications towers, fiber optic networks and data storage assets.

Valuations utilize significant unobservable inputs (Level 3) when determining the fair value of infrastructure’s utilities, transport, midstream and data assets. The significant Level 3 inputs include:

Valuation Technique	Significant Unobservable Inputs	Relationship of Unobservable Inputs to Fair Value	Mitigating Factors
Discounted cash flow analysis	•Future cash flows	•Increases (decreases) in future cash flows increase (decrease) fair value	•Increases (decreases) in cash flows tend to be accompanied by increases (decreases) in discount rates that may offset changes in fair value from cash flows
	•Discount rate	•Increases (decreases) in discount rate decrease (increase) fair value	•Increases (decreases) in discount rates tend to be accompanied by increases (decreases) in cash flows that may offset changes in fair value from discount rates
	•Terminal capitalization multiple	•Increases (decreases) in terminal capitalization multiple increases (decreases) fair value	•Increases (decreases) in terminal capitalization multiple tend to be accompanied by increases (decreases) in cash flows that may offset changes in fair value from terminal capitalization multiple
	•Investment horizon	•Increases (decreases) in the investment horizon decrease (increase) fair value	•Increases (decreases) in the investment horizon tend to be the result of changing cash flow profiles that may result in higher (lower) growth in cash flows prior to stabilizing in the terminal year

Key valuation metrics of the company’s utilities, transport, and midstream assets at the end of 2022 and 2021 are summarized below.

	Utilities		Transport		Midstream
AS AT DEC. 31	2022	2021	2022	2021	2022	2021
Discount rates	7 – 11%	7 – 11%	8 – 14%	7 – 14%	15%	15%
Terminal capitalization multiples	18x	20x	9x – 15x	9x – 15x	10x	10x
Investment horizon	10 – 20	10 – 20	10	10	5 – 10	5 – 10

c)    Real Estate

	Cost				Accumulated Fair Value Changes				Accumulated Depreciation				Total
AS AT AND FOR THE YEARS ENDED DEC. 31 (MILLIONS)	2022		2021		2022		2021		2022		2021		2022		2021
Balance, beginning of year	$	11,568	$	9,420	$	881	$	393	$	(1,481)	$	(1,274)	$	10,968	$	8,539
Changes in basis of accounting	11		(38)		1		8		31		1		43		(29)
Additions/(dispositions)1, net of assets reclassified as held for sale	1,202		207		28		(657)		59		268		1,289		(182)
Acquisitions through business combinations	3,224		2,172		—		—		—		—		3,224		2,172
Foreign currency translation	(638)		(193)		(35)		(2)		115		37		(558)		(158)
Fair value changes	—		—		1,039		1,113		—		—		1,039		1,113
Depreciation expenses	—		—		—		—		(523)		(513)		(523)		(513)
Impairment charges	—		—		(120)		26		—		—		(120)		26
Balance, end of year	$	15,367	$	11,568	$	1,794	$	881	$	(1,799)	$	(1,481)	$	15,362	$	10,968

1.For accumulated depreciation, (additions)/dispositions.

The company’s real estate PP&E assets include hospitality assets accounted for under the revaluation model, with the most recent revaluation as at December 31, 2022. The company determined fair value for these assets by using the depreciated replacement cost method. Valuations utilize significant unobservable inputs (Level 3) when determining the fair value of real estate assets. The significant Level 3 inputs include estimates of assets’ replacement cost and remaining economic life.

d)    Private Equity and Other

Private equity and other PP&E primarily includes assets owned by the company’s private equity and residential development businesses. These assets are accounted for under the cost model, which requires the assets to be carried at cost less accumulated depreciation and any accumulated impairment losses. The following table presents the changes to the carrying value of the company’s PP&E assets included in these businesses:

	Cost				Accumulated Impairment				Accumulated Depreciation				Total
AS AT AND FOR THE YEARS ENDED DEC. 31 (MILLIONS)	2022		2021		2022		2021		2022		2021		2022		2021
Balance, beginning of year	$	21,083	$	18,601	$	(1,022)	$	(873)	$	(4,512)	$	(3,631)	$	15,549	$	14,097
Changes in basis of accounting	(37)		(820)		(8)		(3)		5		301		(40)		(522)
Additions/(dispositions)1, net of assets reclassified as held for sale	1,443		1,120		41		97		372		271		1,856		1,488
Acquisitions through business combinations	1,502		2,518		—		—		—		—		1,502		2,518
Foreign currency translation	(967)		(336)		11		(3)		170		34		(786)		(305)
Depreciation expenses	—		—		—		—		(1,848)		(1,501)		(1,848)		(1,501)
Impairment charges	—		—		137		(240)		—		14		137		(226)
Balance, end of year	$	23,024	$	21,083	$	(841)	$	(1,022)	$	(5,813)	$	(4,512)	$	16,370	$	15,549

1. For accumulated depreciation, (additions)/dispositions.