Companies will invest more than R$2 billion in two projects with total capacity of 738 MWp

06/02/2022

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Adriana Waltrick — Foto: Silvia Zamboni/Valor

The Chinese interest in the Brazilian power industry is confirmed with yet another acquisition by Spic Brasil, a subsidiary of the state-owned State Power Investment Corporation of China (Spic), this time in the solar segment. The company bought controlling stakes of 70% in two greenfield solar projects from Canadian Solar and will invest more than R$2 billion. The acquisition is subject to approval by the antitrust regulator CADE.

The plants have a generating capacity of 738 megawatts of power. The largest project, Marangatu, is located in Brasileira (Piauí) and will have an installed capacity of 446 MW. The smaller one, Panati-Sitiá, in Jaguaretama (Ceará), will have 292 MWp of installed capacity.

The plants will be able to generate electricity equivalent to the annual consumption of more than 900,000 homes. Spic operates in thermal, hydro, and wind generation, and this is the company’s first foray into the solar segment in Brazil. Worldwide, the group has extensive experience in the sector. For Canadian, the sale is expected to monetize 2.3 GW of power in scaled solar projects in Brazil.

CEO Adriana Waltrick told Valor that the company intends to be among the three main private-sector players in power generation, with about 10 GW installed by 2025 and growth in renewable sources.

If everything goes right, operations are expected to begin by the end of 2023, increasing net operating revenue by 12% and jumping to almost 4 GW of capacity from the current 3.1 GW, in addition to 1.7 GW of wind and solar in the pipeline.

“Brazil has a great potential in solar and wind. However, we have several goals in Brazil and worldwide to reduce fossil fuels. As a group, we have several goals to neutralize our carbon footprint by 2030,” Ms. Waltrick said.

Of the amount invested, Spic intends to fund 60% with project finance and 40% with equity, split between Spic (70%) and Canadian Solar (30%). The executive understands the current situation of high-interest rate and capital cost increase but considers that this is a long-term investment in a temporary context.

“All the funding is being contracted. We expect to close the deal in the next 90 days, so all funding and equity structures will be advanced”, Ms. Waltrick said.

The strategic partnership between the companies marks Spic’s entry into the solar segment and will lead to a joint venture in the future, the executive said. She knows that at the current moment the production chains of the solar segment are under pressure due to intermittent operations in Asian factories, lockdown measures in China, and the escalating cost of international freight, which can make capital expenditures oscillate.

“The economic situation is challenging in all global logistics and supply chains, and for the power industry as well. But we have brought one of the world’s largest solar implementers, and we are the world’s largest solar operators.”

Because these are centralized generation plants, that is, large, she believes that scale makes the difference in the acquisition of equipment. The choice of technology has not been defined but is in the final phase.

The bet of the Chinese on this asset shows that even in adverse issues, the electric sector is still the crown jewel. Since the purchase of Pacific Hydro, controlled by the government of China, it owns the wind farms Millennium and Vale dos Ventos (Paraíba). In 2017 it bought the São Simão plant for R$7.18 billion. And in 2020 it bought a slice of the thermoelectric projects GNA I and GNA II, in addition to participation in future expansion projects GNA III and GNA IV.

There are many assets in the market for sale — such as hydroelectric plants of EDP, Ibitu, and Rio Energy, among others — and Ms. Waltrick does not deny that she is mulling over new mergers or acquisitions. However, she does not reveal what she is considering. “We are ambitious. We want to look at the sector very carefully.”

Source: https://valorinternational.globo.com/