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Brazil boosts the expansion of EDP Renováveis

Company will soon put into operation three wind farms and two large solar plants

12/05/2022

Paula Dalbello — Foto: Silvia Zamboni/Valor

Paula Dalbello — Foto: Silvia Zamboni/Valor

The EDP group’s plan to grow in renewable energy involves Brazil. The Portuguese company’s ambition to reach 20 GW of installed capacity by 2025 has the country as one of the main vectors of growth outside Europe.

Paula Dalbello, the new country manager of EDP Renováveis do Brasil, took over the command of the company less than two months ago with the challenge of putting large-scale projects to work. For 2023, the renewable energy generation branch of the group plans to put into operation three wind farms in the Northeast region. In addition, there are two more mega plants, which yield 463 MW, in São Paulo and Rio Grande do Norte. Combined, the plants total more than 1 GW.

In parallel, the executive has the personal challenge of taking care of little Gregory, a five-month-old baby, and between meetings she finds time to breastfeed. The civil engineer told Valor that her goal is to get the projects off the paper and put them into practice. This includes prospecting and developing them until they mature for construction, which means finding good areas, connection points, entering auctions, and closing new power purchase and sale agreements (PPA).

The favorable natural conditions for renewable generation make Brazil the company’s second-largest market. The promise is to invest R$24 billion, but they do not detail the share that will be destined for Brazil. The intention is to build between 1,000 MW and 1,200 MW of renewable projects by 2025, in addition to 6.9 GW of projects with concession or authorization for the medium and long term.

“We have 790 megawatts (MW) in operation, a great part of which is in Rio Grande do Norte. For the coming months, we have three wind power projects in the state that add up to 580 MW. One is already in the operational test phase and two others should start early next year. Also in 2023, we will have two more solar projects, which are coming off the paper, of 463 MW in São Paulo and Rio Grande do Norte,” said the executive.

Most of the energy from the plants is likely to be intended for the free energy market, given the context of the opening in which a greater number of consumers served with high voltage will be able to opt to purchase electricity from any supplier as of January 1, 2024.

Specifically in solar, the company will build the projects in partnership with EDP Brasil, also a subsidiary of the Portuguese group operating in Brazil. The disarrangement of the segment’s supply chains raised capex but was not an obstacle for the projects. “We bring the project, and they help us find the PPAs and the investment is made together,” he explains.

Recently EDP Renováveis sold to Copel the wind complexes Aventura and Santa Rosa & Mundo Novo for R$1.8 billion. It is a strategy of the Portuguese company to rotate assets, which facilitates the monetization of the generating parks before they reach the end of their useful life, besides raising funds for the projects under construction.

“It is a strategy that allows us to feedback the process. We are happy to fulfill the company’s global objective by using our own resources to develop those projects,” says Mr. Dalbello, guaranteeing that there are no more assets available to the market for rotation in the short term.

The Northeast region is the flagship of renewable energies in Brazil and where EDP’s main plants are located. However, the bottleneck of transmission lines has made it difficult for the companies to drain the amount of energy, so the alternative has been to make a mix between submarkets with common connection points, a strategy that has made entrepreneurs migrate to other regions of Brazil.

This is perhaps why São Paulo has become an option. In 2021, the company inaugurated the Pereira Barreto solar complex, in the countryside of the state, with an installed capacity of 252.29 MWdc. The investment was R$750 million, the multinational’s largest investment outside Portugal.

Next year, work will start on the Novo Oriente Solar project, in the municipality of Ilha Solteira, also in São Paulo state, which will have an installed capacity of 254 MWac. Besides the advantage of being close to the consumer centers, the company can also reduce transmission costs.

“It is up to us, as developers, to align our development strategy with best practices. We are developing projects in the Southeast, which is where we will mitigate the impact of the transmission costs of our projects,” he said.

*By Robson Rodrigues — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Expansion in North, Northeast regions is priority, Aegea says

Company won the auction of two public-private partnerships to build sewage systems in Ceará

09/29/2022

Rogerio Tavares — Foto: Divulgação

Rogerio Tavares — Foto: Divulgação

Aegea Saneamento will prioritize expanding in Brazil’s North and Northeast regions, said Rogério Tavares, the group’s chief institutional affairs officer.

On Tuesday, the company won the auction of two public-private partnerships to build sewage systems in Ceará, taking on about R$6.2 billion in investments to universalize services in 24 cities. The group won both contracts by offering discounts of 27.5% and 37.9% on the maximum remuneration to be paid for the services.

“The Northeast and the North regions are our priorities. I wouldn’t say the same thing about the other regions because in those we have little,” the executive told Valor on Wednesday.

“Everything will depend on what concrete opportunities arise. We will analyze them to see if they make sense, just like we will analyze projects in other places, but we will give more attention to these regions. Especially because most of the [country’s basic sanitation] deficit is there,” he said.

With the victory, the company, which had already consolidated itself as the largest private-sector group in basic sanitation in Brazil, now has operations in 178 cities and serves about 25.5 million people. In the Northeast region, Aegea already had municipal contracts in Crato (Ceará), Teresina (Piauí) and Timon (Maranhão). In the North region, the main asset is Manaus (Amazonas), but there are other municipalities in the portfolio, four of them in Rondônia and two in Pará.

Asked about Aegea’s financial situation with the two new contracts, Mr. Tavares said that the company will calmly support the new investments. The plan is to make a typical financing structure, with about 20% to 30% of own funds and loans with state-owned banks, or raise money in the capital market. The specific conditions, he said, will depend on the market situation at the time of contracting the loans.

He also highlighted that the debt-to-EBITDA ratio will remain below the limit of 3.5 times. The indicator was 2.57 times at the end of the second quarter.

The company is still willing to compete for new auctions, the executive said. “We will always study projects and, if it makes sense, we will participate.”

However, he stressed that there are no other concrete opportunities on the radar. Plus, the election season hinders the prospect of new projects this year. “This [Ceará’s] was the last clearly defined auction. From here on, nothing has a set date.”

“There is a possibility of [privatizing] Corsan [Rio Grande do Sul’s basic sanitation company], but we are not sure yet. An opportunity may still arise, but we will see. The end of the year is coming, with an election in the middle of the road. It is a complicated period. If it comes, we will study it,” he said.

In the executive’s view, regardless of the outcome of the elections at the federal and state levels, more business opportunities are expected for 2023. “I don’t think there will be any change in the process. After an initial period of three months [at the beginning of the new terms], things should start moving forward smoothly again.”

As for secondary-market opportunities, Mr. Tavares said the company has nothing on the radar.

*By Taís Hirata — São Paulo

https://valorinternational.globo.com/
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GDP grows 1.2% quarter-over-quarter, above estimates

Industry grew 2.2%, while service sector expanded 1.3%

09/02/2022

Result was above the median of Valor’s estimates — Foto: Edilson Dantas/Agência O Globo

Result was above the median of Valor’s estimates — Foto: Edilson Dantas/Agência O Globo

The June quarter was one of expansion for the Brazilian economy. GDP grew 1.2% compared to the first quarter, seasonally adjusted, data unveiled Thursday by the Brazilian statistics agency IBGE show.

The result was above the median of Valor’s estimates — from 75 consultants and banks — which pointed to a growth of 0.9% in the second quarter compared with the first one. The projections ranged between 0.3% and 1.8%. A group of 34 respondents bet on rates equal to or higher than 1%.

In a year-over-year comparison, GDP expanded by 3.2% in the period, while analysts surveyed by Valor foresaw a 2.8% growth.

IBGE also revised the GDP for the first quarter of 2022, which grew 1.1% compared to the fourth quarter of last year. The institute had previously reported a 1% growth in the period.

On the supply side, the industry grew 2.2% in the second quarter, compared to the first, a result above the expected expansion of 0.9% calculated by Valor. Compared to the first quarter of 2021, the industry increased 1.9%. The median projection, according to Valor, was 0.4%.

The service sector expanded 1.3% in the second quarter, compared to the previous one. The average estimate calculated by Valor was a high of 0.6%. Compared to the second quarter of 2021, there was an increase of 4.5%. In Valor’s survey, a growth of 3.7% was expected.

Agriculture grew 0.5%, below the average projection of a 2.7% increase calculated by Valor. The industry was down 2.5% year-over-year. The median expectation of the market, according to Valor, was an increase of 1.1%.

On the demand side, household consumption increased by 2.6% on the second quarter of 2022, compared to the first quarter of the year, seasonally adjusted. Valor’s expectation was a 1.1% growth. Compared to the second quarter of 2021, the indicator had an increase of 5.3%. In this case, financial firms estimated an increase of 3.6%.

Government demand fell 0.9% and the gross fixed capital formation (GFCF, a measure of investment in machines, construction and innovation) rose 4.8% in the second quarter compared to the first quarter.

Economists consulted by Valor estimated an increase of 0.3% for government consumption and an increase of 2.5% for GFCF within the GDP.

Compared to the second quarter of 2021, there was an increase of 0.7% in government consumption and an increase of 1.5% in GFCF. The expected projections were 2.1% and -1.2%, respectively, according to Valor’s survey for the year-over-year growth.

The investment rate reached 18.7% of GDP in the second quarter of 2022.

According to IBGE, exports fell 2.5%, while imports rose 7.6% in the second quarter of 2022, compared to the first quarter.

Consultants and financial institutions heard by Valor expected, on average, that exports would drop 1.1% and imports would rise 6.7%.

*By Lucianne Carneiro, Alessandra Saraiva, Anaïs Fernandes — Rio de Janeiro, São Paulo

Source: Valor International

https://valorinternational.globo.com/
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