How Brookfield Renewable Stock Gained 40% in a Month

Brookfield Renewable stock (TSX:BEP.UN) surged in share price from a landmark deal and strong earnings, leading to a 40% jump.

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After years of remaining around $30 per share, Brookfield Renewable Partners LP (TSX:BEP.UN) saw shares surge this month. In fact, as of writing, shares of BEP stock are now up about 40% in May alone! So let’s get into what’s been driving this share price, and if it’s just a market reaction, or due to rise higher.

What happened

The second-quarter results were the main driving force behind BEP stock. Yet it really came down to one part of the results. Certainly, BEP stock reported impressive first-quarter 2024 results, which included a rise in funds from operations (FFO) and revenue growth. Despite a net loss attributable to unitholders, the company’s financial metrics were favourable enough to boost investor confidence.

What’s more, the company, along with a consortium, signed a binding agreement to acquire Origin Energy, a significant player in Australia’s energy market. This acquisition is valued at US$18.7 billion and is seen as a major step in enhancing Brookfield’s renewable energy portfolio and supporting Australia’s transition to net zero emissions.

Yet while this was all great news, the biggest piece that investors were hooked to was a deal with Microsoft (NASDAQ:MSFT). So let’s see what has investors and analysts alike thrilled.

The Microsoft deal

The recent surge was significantly influenced by a landmark deal with Microsoft. This agreement is notable for its unprecedented scale and scope, marking the largest corporate clean energy purchase ever.

Under the terms of this deal, Brookfield Renewable will deliver over 10.5 gigawatts (GW) of new renewable energy capacity to Microsoft from 2026 to 2030. This capacity is nearly eight times larger than any previous single corporate power purchase agreement (PPA). The renewable energy will primarily come from wind and solar farms, along with other innovative carbon-free energy technologies

The project aims to support Microsoft’s goal of matching 100% of its electricity consumption with zero-carbon energy purchases by 2030. The agreement is designed to be flexible and scalable, allowing for potential expansion to include additional renewable energy projects in the Asia-Pacific, India, and Latin America, beyond the initial focus on the U.S. and Europe.

Analysts on board

Whether it’s the delivery of power, the growth through 2030, or the scalability, analysts were on board for all of it. The agreement is not only significant in terms of capacity but also strategically important for both companies. 

For Microsoft, this aligns with their goal of matching 100% of their electricity consumption with zero-carbon energy purchases by 2030. This is a critical component of their broader sustainability and decarbonization objectives. For Brookfield, this deal demonstrates their capability to scale up renewable energy production significantly, thereby positioning them as a leader in the industry.

And, of course, the scalability cannot be ignored. The agreement includes provisions for potential expansion into new markets in Asia-Pacific, India, and Latin America. This flexibility allows both companies to adapt to emerging opportunities and market demands. This further enhances the long-term strategic benefits of the partnership. Add in the strong results, and the company is looking like a major win on the TSX today. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has positions in Brookfield Renewable Partners and Microsoft. The Motley Fool recommends Brookfield Renewable Partners and Microsoft. The Motley Fool has a disclosure policy.

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