A clean energy ‘supermajor’ wants to expand its megadeal

Toronto-based Brookfield is a giant, with nearly $1 trillion in assets under management by its own calculation and a heavy focus on real estate, though in recent years it has pushed more aggressively into infrastructure and renewable energy. In February, it announced it had raised $10 billion for a second energy transition-focused fund, after drawing in $15 billion two years earlier.

That huge size has given it outsized influence in the world of clean power, and Brookfield has not been shy about making major bets: Its 10.5 GW deal with Microsoft could ultimately result in $15 billion of capital expenditure, Vevaina said. Shortly after, it partnered with Singapore’s Temasek to buy the French renewable-power producer Neoen, valuing that company at €6.1 billion ($6.6 billion).

Taken together, those two transactions encapsulate Brookfield’s strategy when it comes to renewables: Its mammoth scale — it has almost 34 gigawatts of clean power-generating capacity, more than the total comparable figure for the UK — allows it to more easily finance the development of solar and wind, extract better terms from suppliers, and court the most lucrative customers.

“There’s a movement to scale,” Vevaina said. “So if you’re large, [if] you have these relationships with folks like Microsoft and others, you can really unlock a lot of value from a smaller developer that might not have those things.”

That’s where the Microsoft deal comes in. (Brookfield has others like it, including a similar, albeit smaller, one with Amazon.) Vevaina said Brookfield plans to use the existing pipeline of renewable projects in its portfolio to deliver power to the tech giant globally through a series of mini-deals, each at a different price point, but acknowledged it “would absolutely” look to acquire new power generation assets as well as entire companies in order to meet fast-growing demand: “We are very bullish on the sector, and we are constantly out there, looking for good acquisition opportunities and growth.” It will also look at technologies beyond solar and wind power, including small modular nuclear reactors (SMRs), he said.

“The market is so large, and the pie keeps growing,” he said. “This is a big opportunity for us.”

In part, that is driven by data center demand that Vevaina said will be even higher than the most aggressive forecasts of multifold increases in electricity requirements in the coming decades. (Brookfield also operates its own data centers.) “It’s really staggering scale. I think it’s going to drive quite a lot of growth for renewables [and] other technologies like storage and SMRs.”

Vevaina framed Brookfield’s approach — of acquiring and expanding renewables companies, while agreeing long-term, globe-spanning deals with tech firms and other clients desperate for that electricity — as that of a clean energy “supermajor.”

A number of companies, including Danish wind power giant Orsted and US renewable energy company NextEra, have been dubbed supermajors, but Brookfield stands apart in that it is not, in fact, an energy company. Yet it has, since at least 2022, been describing itself as a “supermajor.”

The term has for decades been reserved for oil and gas giants like Chevron or Shell, so to see renewables companies and investors claim a moniker with clear overtones of the fossil-fuel industry is surprising. (“The only point we’re making with that is just about scale,” Vevaina told me.)

Brookfield’s dealmaking also reflects a broader trend in the world of green power: The role of private investors. Two of the firm’s entities — Brookfield Infrastructure Partners and Brookfield Renewable Partners — are listed on the New York Stock Exchange, but the privately held parent company controlled more than 30% of the former and nearly 50% of the latter, according to the most recent SEC filings available.

Private investors in 2022 were responsible for a record-breaking amount of investment in renewables and clean power companies, according to S&P Global. Whereas publicly traded oil and gas firms dominated the energy system of the 20th century, private ones are playing an ever-bigger role as time goes on.

That reflects the market dynamics of the energy transition in multiple ways. For one, fossil fuel investors have been loath to support strategies that see public oil and gas companies shift away from what has been a lucrative industry with dependable dividends, even as oil prices have whipsawed. In addition, major clean energy projects like solar or wind farms require huge upfront investment and have tighter profit margins than those of oil and gas, a worry for publicly listed companies that are subject to quarterly earnings reports. Their scale also helps. Higher interest rates, supply chain struggles, and persistent inflation in recent years have hammered smaller solar developers, in particular in the US and Europe, driving a wave of consolidation.