Power generation company sees better landscape after reducing losses thanks to improvement in reservoir levels
03/09/2022
AES Brasil, a subsidiary of U.S.-based AES Corp., managed to reduce losses in the fourth quarter of 2021 thanks to a substantial improvement in reservoir levels due to a more favorable rainfall regime. Now the power generation company sees a better landscape.
The company’s earnings continued to be impacted in 2021 due to the hydrological risk and the purchase of power due to the unfavorable scenario that affects the portfolio of hydroelectric assets. To move away definitively from this water exposure, AES Brasil has accelerated investments in the diversification of the power generation mix.
By 2026, R$3.8 billion are planned, considering the construction of the Tucano (322 MW) and Cajuína (1.3 GW) wind farms, in addition to the modernization and maintenance of assets in operation. The focus for now is on wind operations, since the solar source has been losing competitiveness in the face of pressure from production chains.
The company has 4.7 GW of operational installed capacity and the goal is to reach 6 GW when all greenfield projects – those built from scratch – are finished. Today AES has 57% of its portfolio in hydroelectric plants and this balance is likely to avoid new exposures. Chief Financial Officer Alessandro Gregori told Valor that the margins were affected by the water risk factor, but he is already feeling the compensation among the sources.
“As a strategy, we are diversifying the portfolio. Last year, we signed almost 900 MW of new PPAs [contracts] and created new business fronts with almost 30 MW of PPAs in dollars that we signed in 2021,” Mr. Gregori said.
This bet by the company in new PPAs in foreign currency can pave the way for new deals and serves as a hedge against exchange rate volatilities. This is expected to be made available to the customers of the power generation company since many of them have revenue in dollars and are also interested in having costs in the foreign currency.
“Despite the worst year ever, in which we brought forward the portfolio management, we managed to profit R$516.5 million, clearly lower than in 2020, when we profited R$848 million, but a reasonable and important volume in view of the worst year of hydrology,” the executive said.
According to him, the “lean times” are over and the dynamics of diversification has added important wind power projects. Considering the contracts delivered, wind and solar now account for most of the portfolio mix.
“The diversification has this result at a time. When we have sources with worse results, other sources compensate.”
Source: Valor International