Brookfield Renewable (BEPC 0.44%)(BEP 0.11%) started as a hydroelectric power producer. It has since become a large-scale renewable energy company by adding onshore wind, utility-scale solar, distributed generation (eg, rooftop solar), and energy storage platforms. The company currently has 21 gigawatts (GW ) of operating capacity, making it one of the largest renewable energy producers in the world.
Brookfield also has an extensive renewable energy development project backlog across all those technologies and offshore wind. At last count, it had 69 GW of projects under development. However, that extensive backlog hasn’t stopped Brookfield from seeking to tap into new sources of growth . Recently, the company added two new potentially massive long-term growth drivers in green hydrogen hydrogen and carbon capture.
A multi-trillion-dollar market opportunity
Wind and solar energy can go a long way in helping reduce carbon emissions. However, they can’t completely address the climate issue. The economy needs a versatile fuel like natural gas to help manage seasonality and renewable energy‘s intermittency issues. Many believe that green hydrogen hydrogen could be the solution. If so, it could be a $1 trillion annual market.
Brookfield is seeking to tap into the hydrogen opportunity. In late 2020, it agreed to supply renewable energy to fully energize a planned green hydrogen plant by Plug Power (PLUG -0.72%). Both companies hope to build upon that relationship in the coming years, driven by Plug Power’s goal to get more than half its hydrogen from renewable energy by 2024. Supplying renewable energy to hydrogen producers could enable Brookfield to maximize the value of its existing assets and continue building new capacity.
Brookfield Renewable is also joining forces with energy infrastructure giant Enbridge (ENB 0.23%) to build a green hydrogen plant in Canada. Brookfield will supply electricity for the plant from nearby hydroelectric power plants, while Enbridge will inject hydrogen into its natural gas distribution network. The project represents the first phase of creating what they hope will be a regional green economy ecosystem that produces, distributes, and uses green hydrogen. Expanding further into the hydrogen value chain through building and operating production facilities could significantly enhance Brookfield’s long-term growth prospects.
Looking to capture this potential massive opportunity
Carbon capture and storage (CCS) is another potentially massive market opportunity. According to oil giant ExxonMobil (XOM 0.79%)there will be a $4 trillion market by 2050 to capture carbon dioxide from the air and store it underground. That’s leading Exxon to invest $15 billion in CCS and other low-carbon energy solutions like hydrogen and biofuels over the next several years.
Brookfield Renewable also sees a bright future in carbon capture. That recently led it to invest in a leading North American modular carbon capture solutions provider. It has committed to funding up to 300 million Canadian dollars ($234.6 million) for projects that meet its return thresholds . It has already started funding the build-out of that company’s first project. Given the terms of the agreement, Brookfield could own a majority of this company in the future.
Brookfield sees a bright future for providing decarbonization solutions. The company noted that it would require trillions of dollars to decarbonize hard to abate industrial sectors like steel and chemicals in the decades to come. It therefore sees significant potential to grow its carbon capture footprint in the coming years.
These emerging industries could be major growth drivers
Brookfield has a tremendous amount of growth already lined up to build out more wind, solar, and hydroelectric capacity. However, that’s not stopping it from seeking out new expansion opportunities. Its recent investments in hydrogen and carbon capture could pay enormous dividends down the road , given the massive potential size of those industries. That enhances its appeal as one of the best ways to play the global decarbonization megatrend.