CAPITAL MANAGEMENT

12 Months Ended

Dec. 31, 2021

Disclosure of objectives, policies and processes for managing capital [abstract]

CAPITAL MANAGEMENT

CAPITAL MANAGEMENT

Brookfield Renewable’s primary capital management objectives are to ensure the sustainability of its capital to support continuing operations, meet its financial obligations, allow for growth opportunities and provide stable distributions to its LP unitholders. Brookfield Renewable’s capital is monitored through the debt-to-total capitalization ratio on a corporate and consolidated basis. As at December 31, 2021 these ratios were 8% and 33%, respectively (2020: 6% and 27%, respectively).

Brookfield Renewable has provided covenants to certain of its lenders for its corporate borrowings and credit facilities. The covenants require Brookfield Renewable to meet minimum debt-to-capitalization ratios. Subsidiaries of Brookfield Renewable have provided covenants to certain of their lenders for their non-recourse borrowings. These covenants vary from one credit agreement to another and include ratios that address debt-service coverage. Certain lenders have also put in place requirements that oblige Brookfield Renewable and its subsidiaries to maintain debt and capital expenditure reserve accounts. The consequences to the subsidiaries as a result of failure to comply with their covenants could include a limitation of distributions from the subsidiaries to Brookfield Renewable, as well as repayment of outstanding debt. Brookfield Renewable is dependent on the distributions made by its subsidiaries to service its debt.

Brookfield Renewable’s strategy during 2021, which was unchanged from 2020, was to maintain the measures set out in the following schedule as at December 31:

	Corporate						Consolidated
(MILLIONS)	2021			2020			2021			2020
Commercial paper(1)	$	—		$	3		$	—		$	3
Debt
Medium term notes(2)	2,156			2,140			2,156			2,140
Non-recourse borrowings(3)	—			—			19,352			16,006
	2,156			2,140			21,508			18,146
Deferred income tax liabilities, net(4)	—			—			6,018			5,310
Equity
Non-controlling interest	—			—			12,303			11,100
Preferred equity	613			609			613			609
Perpetual subordinated notes	592			—			592			—
Preferred limited partners’ equity(5)	881			1,028			881			1,028
Unitholders’ equity	9,607			9,030			9,607			9,030
Total capitalization	$	13,849		$	12,807		$	51,522		$	45,223
Debt-to-total capitalization	16		%	17		%	42		%	40		%
Debt-to-total capitalization (market value)(6)	8		%	6		%	33		%	27		%

(1)Draws on corporate credit facilities and commercial paper issuances are excluded from the debt-to-total capitalization ratios as they are not a permanent source of capital.

(2)Medium term notes are unsecured and guaranteed by Brookfield Renewable and excludes $7 million (2020: $8 million) of deferred financing fees, net of unamortized premiums.

(3)Consolidated non-recourse borrowings include $30 million (2020: $15 million) borrowed under a subscription facility of a Brookfield sponsored private fund and excludes $132 million (2020: $122 million) of deferred financing fees and $160 million (2020: $63 million) of unamortized premiums.

(4)Deferred income tax liabilities less deferred income tax assets.

(5)Subsequent to year-end, on January 31, 2021, Brookfield Renewable completed the redemption of C$72 million of Series 5 Preferred Units.

(6)Based on market values of Preferred equity, Perpetual subordinated notes, Preferred limited partners’ equity and Unitholders’ equity.