In terms of where some of those dollars might be, I would say, just given the relative dispersion of our portfolio that today is largely in North America and Western Europe. Surely because of that concentration, that’s probably where we’d see the greatest amount of asset recycling.
Mark Jarvi: Okay. Maybe I’ll just sneak one more in. In recent sort of updates, you guys have had a positive turn around maybe stepping into larger offshore wind investments. Is that still something that you’re really active on? Has any kind of change in terms of the likelihood of making a larger plain offshore wind sometime in 2024?
Connor Teskey: Sure. So our approach to offshore wind, and we’ll quickly restate it here. We love the technology. It’s large, it’s fast growing, it’s mature, and quite frankly, because of the differentiated load pattern it can provide to onshore wind and onshore solar, it is actually critical to many power markets around the world. What we have struggled with in the past is the investment profile or the basis risk you had to take as an investor or as a developer where sometimes you had to invest hundreds of millions or billions of dollars up front for the right to build out a project in four or five or six years. And in that time period, in that leg, market conditions could shift and go against you. Obviously, today, there are a number of market participants who have seen headwinds that maybe need to get out of some of their offshore wind projects.
And maybe some of those offshore wind projects are a lot closer to construction or a lot closer to coming online and therefore there is less of that basis risk that we had an aversion to. So I would say we are much more active in reviewing opportunities in the offshore space today than we would be, would have been a couple years ago. But like anything, we’ll compare those opportunities to the risk-adjusted returns we see elsewhere and allocate to the best ones.
Mark Jarvi: Understood. Thanks for your time today.
Operator: Our next question will come from the line of Nelson Ng with RBC Capital Markets.
Nelson Ng: Great, thanks. Good morning, everyone. I had a few questions on your development pipeline. So obviously you’ve highlighted a lot of opportunities in the US, but I was just looking at your development pipeline and South America is pretty thin. I don’t think there are any wind or utility scale projects in the advanced stage there. So I was just wondering is there a lack of opportunities there or are you just mainly focused on developing in North America and Europe at the moment?
Connor Teskey: Hi. Very good question and relatively easy to answer. Obviously, the vast majority of our development activity, traditionally in South America, has been in Brazil. And for the last few years, we have, I would say, been very, very successful in developing some large and attractive projects in that market. For those that don’t know, power prices in Brazil, due to their very strong concentration of hydroelectric generation across the grid are very dependent on hydrology levels. And if you went back, I would say, two to four or two to five years ago, hydrology levels across the Brazilian system were relatively low and that supported higher power prices that made wind and solar development very, very, very attractive.
And that’s the market where we developed many of those large projects into that have come online in 2022 or 2023 or are scheduled to come online in 2024. But what has since happened, I would say, in the last 18 months is hydrology has dramatically improved in Brazil. And because that is across the system, it pushes power prices down and today they are at very, very low historical levels. Obviously our business in Brazil is almost 100% contracted. So we are not exposed to those lower power prices. But it does make it more difficult to find new wind and solar projects that can secure contracts in this price environment and still be developed at attractive levels. So this is a short-term dynamic. Wind and solar growth in Brazil will recover and it will be very robust.
But this has been driven by a relatively large shift in hydrology levels that has changed the market prices and we are simply in a period of time where development activity in that market is going to be reduced because it’s simply tough to secure contracts at attractive enough levels to justify the CapEx.
Nelson Ng: That’s a really good color, Connor. I’m glad they’re getting more water, but too bad. Yeah, it slows down development. So the next question is, obviously you’ve commissioned about 4.5 gigawatts in ’23 and that’s growing to, I think, 6.6 and 7.6 gigawatts over the next two years. I know you have your target of roughly deploying call it 1.5 billion per year on average. So of that 1.5 billion, roughly what portion of that is now going to development?
Connor Teskey: Yeah, sure. So, I would say going into the next couple of years, 2024, 2025, approximately a third, give or take, is already kind of identified in organic growth opportunities. That number could prove to be a little bit light, but I would say it’s about a third.
Nelson Ng: Okay. And then just one last question. I noticed that you are also involved in solar panel manufacturing to some degree. It looks like there’s about 1.5 gigawatts and 2.5 gigawatts next year. Like are you self-supplying some of your developments or is this more of a hedge on costs or how do you look at your involvement in solar panel manufacturing?
