Brookfield’s 10.5GW Microsoft deal places ‘certainty of delivery’ over price

Brookfield Asset Management and Brookfield Renewable have entered into an agreement with Microsoft to contract 10.5GW, or 30 percent, of Brookfield’s renewable capacity growth, from 2026 to 2030.

The deal is a framework agreement estimated to be more than $10 billion in cost, setting up a series of PPAs for this pipeline of deals that will be priced at market rate once those projects come online, affiliate title Infrastructure Investor understands. These projects are currently at various stages of development, primarily in utility-scale wind, solar and storage. They will also be across the US and Europe, with roughly 80 percent in the former and 20 percent in the latter.

Stephen Gallagher, chief executive of Brookfield Renewable’s US business, believes this is a turning point for the data centre industry as it grapples with the sheer power needs of the coming artificial intelligence revolution.

“We have a long history of partnering with Microsoft; having already contracted close to a gigawatt of renewable capacity outside of this agreement,” he told Infrastructure Investor. “What we are seeing is the industry is placing more value in certainty of execution. Buyers are looking to partner with larger scale operators and developers, such as Brookfield, who can deliver not just individual projects but multiple portfolios over multiple years. We’re moving away from a market primarily driven by price to one increasingly valuing certainty of delivery.”

And it is a trend Gallagher thinks will grow: “There is a potential to expand on our collaboration with Microsoft over time.” 

Indeed, Brookfield hopes to implement similar deals with Microsoft in India, Asia-Pacific and Latin America.

Despite the projects being behind-the-meter, the typical completion risk that accompanies getting projects through permitting processes is not expected to affect the deal due to the size of Brookfield’s overall renewables pipeline.

Infrastructure Investor understands that some of the funds affected by this deal are the Brookfield Infrastructure Fund IV (via its portfolio company X-Elio), the Brookfield Global Transition Fund I (via its portfolio companies Scout Clean Energy and Urban Grid), the Brookfield Infrastructure Fund V (via its portfolio company Deriva, formerly Duke Renewables) and the Brookfield Global Transition Fund II (via its portfolio company OnPath).

Brookfield declined to comment on how many gigawatts each of these assets is expected to contribute to the overall 10.5GW figure. The firm also declined to comment on what percentage of these assets’ overall production capacity will be contracted to Microsoft.

New platforms acquired in the coming years will likely be incorporated into the deal later. This could mean new technologies could enter the mix, as Connor Teskey, president of Brookfield Asset Management and CEO of its renewable power and transition unit, told Infrastructure Investor in September that the firm would consider investments in hydrogen and nuclear.

These PPAs will primarily be based on renewable energy certificates, meaning that Microsoft will be annually matching its energy demand with Brookfield’s generation. The firm, alongside other major tech players, has signalled that it intends to move towards hourly matching by 2030. As this progresses, Brookfield expects to use hydropower and storage to fill in those intermittency gaps.

Microsoft declined to comment.