Welcome to the Brookfield Renewable Partners 2016 Second Quarter Conference Call and Webcast. [Operator Instructions]. At this time, I would like to turn the conference over to Sachin Shah, Chief Executive Officer. Please, go ahead, Mr. Shah.

Thank you, Operator. Good morning, everyone and thank you for joining us this morning for our second quarter conference call. Before we begin, I'd like to remind you that a copy of our news release, investor supplement and letter to shareholders can be found on our website at brookfieldnewable.com. I would also like to remind you that we may make forward-looking statements on this call. These statements are subject to known and unknown risks and our future results may differ materially. For more information, you're encouraged to review our regulatory filings available on SEDAR, EDGAR and our website. The business performed well in the second quarter in spite of weak generation. Our asset base continues to be predominantly focused on high-quality hydro assets that benefit from the stability of long term contracts, but also have significant upside. Our access to capital remains excellent, supported by our investment grade balance sheet and high cash margins. And finally, the investment environment for premium, renewable assets remains extremely attractive. Long term power market fundamentals continue to support our ability to acquire assets for value and provide significant upside to the cash flows with strong downside protection to the business. In all of our markets across North America, Europe and Latin America, we're seeing the following three themes. One, short term wholesale prices are below the level needed to drive large-scale investment in the power sector. Two, government policies and incentives continue to be needed to support investment in new, renewable technologies as a means to reduce carbon. And three, traditional power supply in developed markets is under pressure from policies targeting carbon reduction, while supply in developing markets it tight, due to economic growth. In North America, we continue to see very weak wholesale energy prices across most markets to the point where…

Thank you, Sachin. After experiencing strong generation in the first quarter, the second quarter brought continued improvement in generation in Brazil, but lowered inflows in North America. Generation in Brazil improved to 95% of historical average, compared to 85% 12 months ago. Although power prices in Brazil have improved since the first quarter, the lower relative year-over-year pricing offset the positive impact of the improved generation. In North America, above average inflows in Quebec were offset by below-average inflows elsewhere in the North American portfolio. This was partly due to the early spring melt which led to strong generation in the previous quarter. New assets helped to offset some of the impact of lower generation. And our reservoirs in North America are near plan levels and well-positioned to capture premium summer pricing. Generation from wind was below plan and the prior year, due to weaker wind conditions in Europe and Brazil and the sale of our 102-megawatt wind facility in California in the third quarter of 2015 which contributed 88 gigawatt hours in the prior-year period. Total generation from the second quarter totaled approximately 8,800 gigawatt hours, below the long term average of approximately 11,000 gigawatt hours and an increase of 2,400 gigawatt hours compared to the second quarter of 2015. Adjusted EBITDA and funds from operations were $377 million and $105 million, respectively, for the second quarter. On a year-to-date basis, funds from operations is in line with the same period of the prior year. Our liquidity position at quarter end was $1.2 billion. We've been able to fund the considerable growth in our portfolio, including the completion of Holtwood, funding of Isagen and continued buildout of our development pipeline, while maintaining a strong financial position with flexibility to capitalize on further growth opportunities. During the quarter, we accessed…

[Operator Instructions]. Our first question comes from Ben Pham from BMO. Please go ahead.

I'm just wondering with the amount of acquisitions that you've done in the last year, particularly in Brazil and more recently Colombia and then you talk about the TerraForm opportunity now. I mean how do you guys kind of look at the whole landscape now, just given that you're in several different geographies on acquisitions, given that there are a couple of asset packages out there and a lot of packages to look at. I think that's kind of what I'm seeing. Does TerraForm -- maybe comment on that and does TerraForm constrain you from doing anything else for some time then as that shakes out to the whole process?

I think you have a couple of thoughts in your question there. I'd start with, how do we think about the geographies? I think, as I laid out in my prepared remarks, each of the geographies that we're in, presents unique and different opportunities. And I think what we've been able to do over the last 15 to 20 years in the business is really make sure that what supports our ability to allocate capital is our strong operating expertise. So everywhere where we have an ability to acquire a large portfolio, invest meaningful amounts of capital, we also have very strong operating and development expertise which just gives us a unique advantage. We can move capital very quickly to markets like Brazil, to markets in Latin America. We have people who we can bring to bear to those situations who can help us underwrite the underlying portfolios. We can take development risk on. We can take price risk on. We obviously can invest in North America and Europe. So for us, to be able to move capital around freely, pick the most opportunistic transaction and support all of that with operating expertise is really core to the strategy that we employ and we don't really think of opportunities as sort of mutually exclusive. We can do them all. We're not constrained by our liquidity or our access to capital. For example, as Nick pointed out, we have $1.2 billion of available liquidity. We share with our infrastructure colleagues, a $14 billion infrastructure fund that was recently raised, of which a meaningful amount is dedicated to renewable power assets. So we have a significant amount of capital that we can bear. We have the operating expertise and we don't feel that we're constrained to just doing one transaction and having to pick and choose at this stage. I think what we're motivated by is ensuring that whatever transactions we pursue, the underlying assets are very high quality. The returns are strong and in line with our stated targets. And that we have something that we bring to the transaction that's unique, like a level of expertise that others really can't compete with.

Okay. And can you remind us or talk about where you guys stand on European offshore wind? I think a year ago you said you were monitoring it, but not too much interested really in it. Can you comment a bit about that, just an update on that?

Sure. You know, look, I think we continue to monitor. I think there have been others who have gone into it who have done quite well. But we're still in the very, very early days. I'd say we're still in the first inning of offshore wind. Most of the projects out there have a very short real life that they've experienced. Many are still in the development and construction stage. And I think no different than wind and solar, these types of technologies have a 20-25 year useful life. And you need to make your returns over that entire period of time. And there's not a lot of history to hang your hat on. I think the other thing with offshore wind that we've continued to just be hesitant on is some of the operational risks, the high-priced contracts you need to make those projects viable relative to where market prices are. But I think over time, like others, we'll continue to get comfortable with it. And the risk profile will decrease. So we're not saying it's not a good technology. In fact, it could be a great technology. It's just at this stage we don't feel that we bring a level of expertise to it that's different than other people.

And more a clean-up question on Colombia, it was mentioned about 100 megawatts of developments. Can you clarify that? Was that something you crystalized as part of the development of the portfolio you acquired there? Or was that already part of some of the operating stuff that you're looking at?

No. That's something new. So it wasn't part of the acquisition, meaning that we didn't ascribe value to that 100 megawatts in our acquisition. You know, this is again, coming back to what we bring to the table, we bring an ability to continue to grow portfolios, to continue to advance development and M&A in that regard. And I think the partnership that we're creating between ourselves and the local management team in Colombia is one where they feel quite confident that we have not only the capital, but the expertise to help them take that 3800 megawatt development pipeline and now start to harvest it and see if there's opportunities to build out assets. And in a market that's very tight that experienced very close to power interruption in the first half of this year, adding these types of new growth opportunities could be extremely lucrative over the long term.

The next question comes from Nelson Ng with RBC Capital Markets. Please go ahead.

Just to follow up on Ben's question in terms of the 100 megawatts of development projects in Colombia, could you talk about or confirm whether it's hydro and what the expected timing for those projects would be?

Sure. So it's two projects that make up the 100 megawatts. They're both hydro. Much of the pipeline is hydro. I'd say substantially all of the pipeline in hydro. And timing, we're still in the environmental assessment stage of development for both of those projects. We need to get through that before we make the decision on building it out. I'd say it's going to take a couple of years before we get to sort of real commercial construction on those projects.

And then just moving on to TerraForm Power, I'm not sure how much you can say. But can you talk about the strategy and process here? Are you essentially waiting for a sales process to participate in? Are you able to continue to buy shares or increase your economic interest? And, I guess, is there anything or any restrictions that prevent you from owning more shares or owning a larger interest in the near term?

Well, what I can tell you is what is public. I'd say first of all, you've seen our disclosure, our 13D, the number of shares we own, the partnership that we've created with another large shareholder. And you've seen the Company has put out a shareholder rights plan which really does preclude us from buying any more shares as a group and so I think what you should expect at this stage is we own what we own. We think it's a portfolio of very high-quality assets. We think we would be a really good sponsor for that business. And we would be beneficial to all the shareholders there that are involved. And obviously we feel that it needs sponsorship in light of what's going on with its parent. So again, we bring that operating expertise, the development expertise. We're in the same geographies as that company. And we think we can be helpful to the situation. And that is really our strategy. Beyond that, it's really up to the Company and its current sponsor to decide what ultimately their process will be. And we're going to be happy participants in that and try to be productive with all of the stakeholders involved to get to a good place for the business.

I see. Okay. And then Sachin, just in terms to your -- the letter to shareholders, I got the impression that you're looking at your European wind portfolio in terms of capital recycling opportunities. I think I read somewhere in an industry publication that you may be looking at divesting your Canadian wind portfolio. Can you clarify whether you're looking at potentially divesting the Canadian or European wind assets or both?

Yes. Look, I think any time you're in a position where you've built assets, you've bought them during a period where maybe those markets were out of favor. And so if I take each of those markets, we've built everything we have in Ontario which is our Canadian business, over the last 10 years. And clearly as a developer and assets under construction, there's a premium return that we target that today, in today's market with today's low-rate environment, those assets should trade at a healthy multiple to the cost of new build. So we have an obligation to look to see if those markets are attractive to others -- sorry, those assets are attractive to others and whether or not we can realize and crystalize value that exceeds our stated long term return targets. And if can, we have a responsibility to our shareholders to recycle capital and then continue to put it to work in new opportunities. Ireland is the same way. You know, we went into that market when Ireland was out of favor. It had raised debt as part of its Eurozone funding requirements. Not many people were investing in the country in 2012 and 2013. And today, it's one of the bright spots in Europe. It attracts very low cost of capital. And again, we have a responsibility to all of our investors to look to see if we can harvest some of that value that's accreted in the portfolio so that we can find other opportunities in that marketplace to keep investing our capital. And so that's what we're doing in both regions. We're more advanced in Canada. And in Ireland I'd say we continue to think about it and contemplate it. But at this stage, we're just considering it.

And then just one last question on Isagen, I was just calculating the average realized price. And I think it totaled about $72 per megawatt hour in Q2 and about $89 per megawatt hour in the first half of the year. So is this typical? Or I think you mentioned that there's the drought. So do you expect power prices in those markets to reduce over time?

So when we went into the transaction, power prices would have been in the 50's. And our expectation is that in a very normal year where you've got average levels of hydrology that that's where they would be today. And then obviously as you continue to have GDP growth in the country which has been in and around 2.5% per year even in the midst of the low oil price environment that you should see demand growth and then that would be offset by new supply. But long term, this is a market that's very tight, 15,000 megawatts supporting 50 million people. In Latin America, it's the third-largest country. And so we think that that $50 a megawatt hour price that we were able to underwrite at, is really a good entry point. Because any new built technology, whether it's a coal plant -- because they do have domestic coal; whether it's gas which is a combination of domestic gas or imported gas; or whether it's hydro; all generally needs close to $100 and above to make a reasonable return in that country. So our view is that we're going in at around $50. It represents a really deep discount to the price you need to get to, to drive new investment. And in the midst of what has been a pretty dry period in the first six months, we've seen that volatility play out with prices spiking. And what we always liked about this portfolio was that it had the ability to capture some of those spikes through its gas plant and through the very large reservoirs that support the portfolio. And so you've seen that play out through the average price realization. But we don't suggest that those types of prices that we'll capture every quarter, nor do we need it to make our underwriting returns.

The next question comes from Rupert Merer with National Bank. Please go ahead.

The follow-up question on Isagen, now you've had some time with that assets, how did they perform in the quarter versus your expectations? You had any surprising there, positive or negative that have arisen since the acquisition?

Sure. So if you recall, we went through this. We acquired the portfolio in January. At that point, plans for the year were already fully baked, approved by the prior Board of Directors. And we really inherited sort of a first-year business plan from the company. I would say on all accounts, they're exceeding that business plan. They're exceeding their stated EBITDA and FFO targets. The development pipeline looks better than we thought. The assets are in great condition which is what we had concluded during our diligence. And the management team is highly capable. They're very good operators. The CEO there has had 30 years of experience in the sector, most of it at Isagen running the plants, running a good operation, focusing on health and safety, security protocols and operating costs. And we think that everything we've seen has been either the same or positive to what we underwrote. And that's always a good place to be. Obviously it's still only the first six months. And this is a very long term investment for us. But we're quite happy with what we bought.

And looking at your power price forecast for the next few quarters, it looks it's come down a little bit from previous expectations and I think mostly down on the proportionate basis. It doesn't sound like that's related to Colombia. Can you talk a little about how your forecasts have shifted in the last quarter and what your expectations are for power prices across the board?

Okay. I may need a little clarification. When you say our forecast, we don't forecast prices. So are you looking at our contract profile?

Yes, that must be it, yes, contract profile.

Okay. Yes, look. We have long term contracts in the business for substantially all of our power. We then do some short term hedging. And what we've seen year over year is that energy prices, not the all-in power price, but energy prices have come down from, call it, $40-ish in most of the markets in the Northeast to about $35. If you read the letter that we put out this quarter, I think we highlight the fact that at the same time what we're seeing is ancillary service revenues, capacity revenues, the other products that our hydro assets generate, have generally trended up in terms of their compensation. And so all in, I'd say we tend to be either flat or slightly better than we would have been maybe a year ago in terms of just baseline price for the power and the other products we sell, but from a contractual perspective, where we might be hedging just the energy, you might see a small decline from a contractual profile perspective.

And then just finally, so you've had a little bit of a shortfall versus the LTA in Q2. Can you give us a quick sense of what your outlook is for Q3?

Sure. Yes, look. Q2 was substantially below LTA. Q1 was substantially above. I'd say coming in halfway through the year, we're in decent shape. We've had a first half that's hanging around LTA. That being said, we've all seen, especially in the Northeast, a very dry, moderate temperature summer which has been great for just people's recreational activity, but obviously has an impact on our business results. What we've done in that period is we've just held the line with our reservoirs, kept them very close to average levels, rather than just drying them down. And we've done that because typically the latter half of the summer you can get temperature spikes. You can get very high pricing in the Northeast. And we want to retain that optionality. It doesn't guarantee that it will show up. But at least we have that optionality in front of us to dry down our reservoirs and capture some premium pricing, albeit on a small basis in the portfolio. So moving into the third quarter, we feel quite good. Reservoirs are in good shape and obviously we need some rain. And we need some volatility in pricing.

The next question comes from Andrew Kuske with Credit Suisse. Please go ahead.

I guess the question is for Sachin. And it's just your thoughts on TerraForm and how you would compare it to, say, other situations that Brookfield's been involved in in the past. And is it analogous to Babcock & Brown Infrastructure Partners, General Growth, Western Wind, Asciano; how would sort of lump this and categorize it as an opportunity?

Yes, look. I think we have a history as a group of combining multiple levels of expertise that we can then use to insert ourselves in situations. In particular, I'd say, we take great pride in having deep operating expertise in all of our platforms, having a strong restructuring background. That's been the roots of the business. And understanding value, first and foremost. And given our view of value and our ability to insert ourselves in situations like General Growth, like Babcock & Brown and now this situation, we think we're uniquely positioned both to remain disciplined on what our view of value is. But too, to bring deeply needed operating expertise to a situation, financial backing and a track record of growing businesses prudently over the long term. And so if you look at all of those situations, that's what we've done. And so we can point to those as a track record. And I think for all shareholders involved in this situation, that's hopefully what we bring to the table.

And then in the letter to shareholders, there's a lot of color and commentary around where power prices are now and various government policies that have affected market dynamics. So maybe the question arising from that is, how do you deal with political risk and political meddling in power markets? Because political meddling in power markets tends to be a fact of life in a lot of them and it causes distortions over time, sometimes for good, sometimes for bad. But how do you deal with that risk? Is your approach different now than it was, say, 10-20 years ago?

No. Look, I think the one thing that we've always been true to as an organization is focusing on supply and demand fundamentals. Because in the end, societies need power. They're always the backbone that drives the economy. And governments, users, stakeholders, utilities; all are fearful of having the lights go out and always want to make sure they have a robust and healthy level of supply. And all that's changed in the last decade is that now, what was the traditional supply that had a meaningful component of thermal, carbon-emitting technology supporting it, has now moved because people want it to move. And governments are supporting that desire to renewable technology. All of that kind of works in our favor. We think that we're premier renewable business. We think that if you want exposure to this changing shift and changing trend that we're a great place to put your capital to work. And what we've done, if you look at everywhere we're investing, whether it's the Northeast United States, whether it's Brazil, whether it's in parts of Europe, it's all with a view of supply that either needs to change and make that transition from thermal-producing to renewable or markets where supply is just too tight and too short, given the growing demand that's backed by economic growth. And that's a good place for us to be. And I think I can say this. Richard or Harry or others could have said this 10 or 15 year ago. We always expected that politics will get in the way in the short term. But over the long term, you need to invest in the electrical sector. You need to keep the supply side healthy. And for us, if we can find those markets that have tight supply and demand dynamics, then we feel quite protected. And if you can layer on top of that a low-price environment that allows you to acquire at a very, very deep discount to replacement cost, it just gives you great downside protection. And that's what we've been doing for the last five to seven years.

The next question comes from Sophie Karp with Guggenheim Securities. Please go ahead.

I have a follow-up on your sort of strategic vision with respect to TerraForm. Historically when we think about a sponsor for a yieldco, such as TerraForm, we would think about the developer who would not only develop and sell assets to the yieldco, but also provide operational and financial support in the forms of, for example, interest payments or things like that. And I'm curious. Being that you are an asset owner yourself, how would you view that relationship? What is your strategic goal there? Do you aim to be that type of sponsor? Or do you view it as something different when you say you would be able to sponsor for TerraForm? How do you envision this relationship?

Sure. I think all you have to do is look Brookfield Renewable Energy Partners. Our sponsorship is one where we grow, develop, run all of the assets internally in the business. And we think that that creates the least amount of conflict, it provides the best long term outcome for our shareholders at Brookfield Renewable and I think that's a good template and a good example that you can use to look at TerraForm.

But wouldn't you compete for assets with TerraForm then?

Yes, look. I don't think we can comment on that today. I think they're obviously two completely separate companies. They have different focus. You know, Brookfield Renewable, our focus has always been on hydro. And we continue to intend to maintain it that way. And right now, all we're is a shareholder in TerraForm without knowing what the future holds, it's very difficult for us to say what strategy we would employ and what the focus of that business would be. I think that's a question for their Board and their management team.

The next question comes from Sean Steuart with TD Securities. Please go ahead.

A couple questions, just a follow-up on TerraForm. You guys consistently talk about the premium value of hydro for various reasons that you've gone through before. Just more broadly, Sachin, how do think about capital allocation tradeoff between investing in a large wind and solar platform and the opportunity to acquire or develop more merchant hydro assets that sort of thing? More just the general risk-reward tradeoff between those two concepts?

Sure. I would say one is we've always -- first, we have a very large wind business to begin with. We have 1,500 megawatts of wind. We don't have a meaningful solar presence today. We have a few small facilities. And what we've always said and what we've always maintained is they're very good technologies, as long as you can acquire them or develop them at the right value. And what we've felt generally over the last five years is that the values were higher than we were comfortable investing on behalf of our shareholders. So we've been patient. We haven't done a lot. All the wind that we have done, we've largely built ourselves. 1200 of the 1500 megawatts of wind that we have in the business today, we've actually developed and constructed ourselves, rather than chasing M&A valuations. So we've never once suggested that we don't like those asset classes. I think the other thing we've said and I remember when we launched BREP just over five years ago. We were at 80% of our business was hydro. And I'd say most people had the prevailing view that hydro would dilute over time and that was causing a little bit of angst. And I'd say since then, I think we've been able to demonstrate that we can find hydro opportunities. In fact today, close to 90% of our business is hydro and we've actually grown the proportionate level of our portfolio in that asset class, while also growing a meaningful wind business, while also getting into other technologies and new geographies and I think we're at that stage. We have the size, the scale, the operating expertise to pursue an opportunity like this. It doesn't change the nature of the business. It doesn't mean that hydro becomes a small component. But it does allow us to continue to diversify and enter what is going to be a technology that's going to be around for the next 50 to 100 years, in a thoughtful way and for value which is accretive to our shareholders.

And the second question is last year's Investor Day that you guys, I think, initially mentioned India as an area of potential interest. Have you gotten any more comfortable with that market? Are you investing much time looking at opportunities there?

We're, we continue to look at opportunities there. We're being patient, obviously. Just we want to make sure whatever opportunity we do invest in is the right one for us. But it's a unique market. It has that -- the same components we talk about which is just a very, very weak supply stack, not enough supply for the billion-plus people who live in the country. It has a significant amount of domestic coal. It needs renewables. Sorry, domestic and imported coal supplying its current power grid and it has made a huge push into renewables to help offset some of that carbon output. What we see there generally is multiple small platforms with wind, solar and hydro. And that's the other unique part about it. There is a meaningful hydro universe in that country that can be quite a good place for us to continue to find hydro opportunities. So we're spending a lot of time. We're doing our research and our homework. And whether we invest this year or next year or in five years, it's going to come down to just making sure it's the right opportunity that we can grow from. We're not in a rush just to be there.

The next question comes from Jeremy Rosenfield with Industrial Alliance Securities. Please go ahead.

And I apologize if the line is a little bit rusty here. Just coming back on the TERP investment opportunity and maybe just some of the other acquisition opportunities that you're seeing right now; is the goal and the strategy to continue to invest alongside co-investors as you've done in the past, just to maintain sort of similar size investments as you've done in recent acquisitions and not sort of maybe overextend yourselves as you go forward?

Yes, Jeremy. It's a tremendous advantage for us to have these private funds, to have partners who will invest alongside of us. It allows us to pursue large-scale opportunities like Isagen. It allows us to obviously have the confidence of the capital availability without worrying about the vagaries of the capital markets. And so I think the luxury we have today is that we can pursue small transactions of 50 megawatts or 100 megawatts, because it's been our bread and butter for so long. We can pursue what I would call average-size transactions, like we did with Holtwood, where we acquired a 300-megawatt hydro portfolio in the Northeast which is right down the middle of the fairway. And we can do a 3,000-megawatt portfolio like we did with Isagen in a new market and all of that combines both the operating expertise and this tremendous availability that we have as an organization. And so you should see us pursuing transactions in all of those respective arenas.

There are no more questions at this time. I will now hand the call back over to Mr. Shah for closing comments.

Okay, well look. Thank you, everyone, again for your continued support and interest in the Company. We're obviously always available to take questions. But we will talk again in the third quarter of this year. Thanks, everyone.

This concludes today's conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.