BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2021

Depreciation on power generating assets is calculated on a straight-line basis over the estimated service lives of the assets, which are as follows:


			Estimated service lives
Dams			Up to 115 years
Penstocks			Up to 60 years
Powerhouses			Up to 115 years
Hydroelectric generating units			Up to 115 years
Wind generating units			Up to 30 years
Solar generating units			Up to 35 years
Gas-fired cogenerating (“Cogeneration”) units			Up to 40 years
Other assets			Up to 60 years

The fair value of the tax equity financing is generally comprised of the following elements:


Elements affecting the fair value of the tax equity financing						Description
Production tax credits (PTCs)						Allocation of PTCs to the tax equity investor are derived from the power generated during the period. The PTCs are recognized in foreign exchange and financial instrument gain (loss) with a corresponding reduction to the tax equity liability.
Taxable loss, including tax attributes such as accelerated tax depreciation						Under the terms of the tax equity agreements, Brookfield Renewable is required to allocate specified percentages of taxable losses to the tax equity investor. As amounts are allocated, the obligation to deliver them is satisfied and a reduction to the tax equity liability is recorded with a corresponding amount recorded within foreign exchange and financial instrument gain (loss) on the consolidated statements of income (loss).
Pay-go contributions						Certain of the contracts contain annual production thresholds. When the thresholds are exceeded, the tax equity investor is required to contribute additional cash amounts. The cash amounts paid increase the value of the tax equity liability.
Cash distributions						Certain of the contracts also require cash distributions to the tax equity investor. Upon payment, the tax equity liability is reduced in the amount of the cash distribution.