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Brookfield bets on bright future for battery storage

Just as it amassed a sizeable fleet of wind farms in recent years, Brookfield Renewable Partners LP sees a move into battery storage as its next big growth opportunity — though a "meaningful investment" is still a ways off, the company's chief executive said.

The ability to store and release energy from intermittent sources like wind and solar farms is viewed as a crucial tool for unlocking more value from renewables and driving higher levels of penetration on the electric grid. Brookfield Renewable Partners already operates energy storage systems that are attached to hydroelectric plants in North America and Colombia. And it was part of a group that recently bought a stake in pumped-storage plants in the U.K., knowing that over time those assets likely will lose value as batteries gain market share, Sachin Shah, CEO of BRP Energy Group LP, the service provider to Brookfield Renewable Partners, said on an Aug. 4 earnings conference call.

"I think the proliferation of renewables and renewable storage will only be additive to our business. It'll surface value from the plants that we own today, and it'll get us an additional asset class to invest in," Shah said. The company has considered investing in batteries "on the margins just as an R&D exercise," he said, "but I'd say for a more meaningful investment ... we're still five years away, at least."

During the first quarter, 71 MW of energy storage capacity was installed in the U.S. — mostly lithium-ion batteries — nearly four times the amount deployed a year earlier, according to market analyst GTM Research. The firm expects annual installations in the U.S. to reach approximately 2,600 MW by 2022.

"The days of large-scale generation and large connected grids is changing ... because our consumers today are no longer just interested in reliable and affordable electricity generation; they're also interested in sustainable energy generation. And as our consumers drive us to look for more sustainable ways to generate electrical energy ... what it's starting to do is it's starting to create a distributed energy network. That distributed energy network can only be optimized through storage," Kevin Yates, president of Siemens AG's energy management division in the U.S. and Canada, said July 11 in announcing a joint venture with AES Corp. that will focus on energy storage.

$2B for growth

Brookfield Renewable Partners has grown its renewable energy portfolio by 60% in the past three years, to 10,731 MW in 2016. While most of its holdings are in hydroelectric plants in North and South America, the company last year operated 38 wind farms totaling 1,590 MW in North America, Europe and Brazil.

In March, it agreed to put up approximately $500 million for a majority stake in TerraForm Power Inc. and all of the outstanding shares in TerraForm Global Inc., holding companies that are owned by bankrupt renewable energy developer SunEdison Inc. Brookfield Renewable Partners is making the acquisition with its majority investor, Brookfield Asset Management Inc.

At the end of June, TerraForm Power's portfolio consisted of 2,607 MW of renewable energy projects in the U.S., Canada, Chile and the U.K. TerraForm Global owns wind and solar plants totaling 919 MW in Brazil, China, India, Malaysia, South Africa, Thailand and Uruguay, according to a June SEC filing.

Assuming the deal for the TerraForm companies closes, Brookfield Renewable Partners said it has upward of $2 billion in liquidity to make additional acquisitions.

"It's very meaningful," Shah said of the company's reserves.