The escalating demand for clean energy is proving robust enough to withstand increased tariffs and shifts in artificial intelligence development, according to Connor Teskey, CEO of Brookfield Renewable Partners Lp [BEP-UN-T]. However, Mr. Teskey cautioned that increased costs resulting from trade barriers would likely be passed on to the company’s U.S. corporate clientele.
Amidst announcements from the White House regarding the imposition of 25-per-cent tariffs on goods from Canada and Mexico, Mr. Teskey addressed investors on Friday, highlighting the immense and growing need for renewable power. This demand is largely fueled by the expansion of AI models and other energy-intensive applications like cloud computing and cryptocurrencies. He emphasized that this demand significantly outstrips the current supply, even considering the numerous wind and solar projects currently in development.
Connor Teskey of Brookfield discusses renewable energy procurement strategies.
This robust demand, Teskey asserted, ensures the continued viability and profitability of new renewable energy projects, even in the face of potentially rising costs for equipment and materials due to tariffs. These increased costs, he explained, would ultimately be transferred to corporate customers through power purchase agreements (PPAs), and potentially further down the line to consumers of their products.
“If incremental tariffs are applied to equipment essential for building renewable energy infrastructure, we anticipate passing these costs through in the form of adjusted PPA pricing,” Mr. Teskey stated during the conference call. He reiterated, “The demand for renewable energy is exceptionally strong, exceeding previous levels. This demand provides ample capacity to accommodate adjustments in project economics due to tariffs, which we will address by adjusting PPA prices.”
To mitigate the impact of evolving trade disputes, Brookfield Renewable Partners LP has proactively broadened its procurement network. The company has established agreements with a diverse range of equipment manufacturers, both within the United States and internationally. This strategic diversification enhances Brookfield’s flexibility in sourcing materials and equipment.
“Regardless of how tariff discussions progress, our diversified procurement strategy enables us to optimize equipment sourcing from the most favorable tariff regions,” Mr. Teskey elaborated. This approach allows Brookfield Renewable to maintain cost efficiency and project timelines despite potential trade headwinds.
Brookfield Renewable Partners, the renewable energy division of Brookfield Asset Management Ltd. [BAM-T], has solidified its position as a leading provider of clean electricity to major U.S. technology corporations. These tech giants are investing heavily in infrastructure to support the rapid advancement of energy-intensive AI models. However, the sector is currently facing supply constraints in meeting this surging energy demand. A landmark achievement for Brookfield Renewable was securing a framework agreement with Microsoft Corp. last year. This deal provides funding to bring 10.5 gigawatts of renewable energy capacity online between 2026 and 2030, offering Microsoft a crucial new source of power for its expanding data centers.
Despite the optimistic outlook, Mr. Teskey acknowledged the time-intensive nature of renewable energy project development. Obtaining the necessary permits and approvals, coupled with the multi-year construction timelines, presents a bottleneck in expanding renewable energy capacity. “The current bottleneck in the system is not demand or customer willingness, but rather the pace of project development and approvals,” he clarified.
Interestingly, the emergence of DeepSeek, a Chinese AI model known for its cost-effectiveness, has sparked discussions about the energy consumption of AI technologies. While DeepSeek’s model has raised questions about the energy-intensive approaches of major U.S. tech companies, Mr. Teskey views advancements in AI energy efficiency positively for the renewable energy sector.
“If emerging models like DeepSeek contribute to greater energy efficiency in AI, it is ultimately beneficial,” Mr. Teskey commented. He explained that more efficient AI models would reduce operational costs, leading to broader adoption and increased demand across various sectors. “This wider adoption will, in turn, accelerate overall growth in the technology sector and drive even greater demand for electricity in the long run,” he stated. “Even considering these technological advancements, the fundamental supply-demand imbalance in the renewable energy market remains strongly in our favor.”
In its recent financial report, Brookfield Renewable Partners LP announced a robust 19-per-cent year-over-year increase in funds from operations for the fourth quarter, reaching US$304-million. While the company reported a net loss of $9-million for the three months ending December 31, it also demonstrated financial strength by increasing its annual distribution by 5 per cent, to US$1.492 per unit, signaling confidence in its future performance and commitment to shareholder returns.
