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The deal makes the Canadian asset manager the biggest shareholder in TerraForm after BlueMountain Capital Management LLC. David Tepper's hedge fund Appaloosa Management LP also has a stake in the company.
TerraForm's shares rose as much as 16.3 percent to $10.18 on Wednesday.
Brookfield said it acquired 11.1 million Class A common shares of TerraForm Power with economic exposure to about 24.82 percent shares under swap agreements.
The asset manager also said it was trying to buy shares owned by SunEdison. (bit.ly/29pSDfM)
Brookfield said it was buying the stake as it appeared to be an "attractive investment opportunity" and would help fund operations at the solar company.
SunEdison, once the fastest-growing U.S. renewable energy company, filed for Chapter 11 bankruptcy protection in April after a short-lived but aggressive binge of debt-fueled acquisitions proved unsustainable.
SunEdison's units, TerraForm Power and TerraForm Global Inc (GLBL.O), were not part of the bankruptcy.
TerraForm Power, which had extended its dateline to file its annual report to May 28, is yet to file the report.
Reporting by Anet Josline Pinto in Bengaluru; Editing by Don Sebastian and Saumyadeb Chakrabarty