History

We began our activities in 2001 by investing in the development of Small Hydroelectric Plants (SHPs). This was a time when suitable regulations were lacking for power generation facilities of this nature and projects were not economically feasible without some form of subsidy. We immediately saw that the best strategy for ensuring growth with quality was through investing in projects from the initial development phase using own funds and manpower given that good assets would soon become scarce and competitive. As a result our focus was on the regulatory front where we participated actively in the discussion of the new rules for the sector and on the technical front, through the development of our first basic SHP projects and river inventories in the state of Bahia. Today, SHPs have become a reality and are disputed by all the leading players in the sector due to the higher rates of return they provide compared with larger scale projects. There are now more than 300 plants in operation amounting to about 3 GW of installed capacity.

In 2006, we identified conditions in the wind power market similar to what we had seen some years before with respect to SHPs – namely a domestic market which was still incipient and lacking suitable regulation, a limited number of equipment suppliers but with a satisfactory knowledge of the winds that already indicated favorable conditions in the Northeast of Brazil compared with other regions of the planet. On the other hand, we detected an exuberant overseas market with high annual growth rates, important technological developments and with the potential for attracting the major world players in the energy sector. These aspects encouraged us to direct part of our resources towards areas of research into wind power generation. The next step was to invest in the development of a major wind power complex with sufficient scale to dilute fixed and transmission costs, thus attracting the attention of suppliers, which until this point had not deemed Brazil worthy of interest.

In 2007, we took the decision of associating with Fundo Infrabrasil, one of the first FIPs (Private Equity Funds) to focus on infrastructure in Brazil and not only having the pre-requisites we have already mentioned but also strict standards in relation to the environment and corporate governance. From this point on the company underwent a process of structuring, always seeking the best market practices.

With the objective of strengthening our capital structure, in 2009 we undertook a new round of raising private equity through the fund, the latter today having a 25% stake in our total capital.

As we had forecasted, wind power’s time in Brazil has arrived. In December 2009 and August 2010, following an in depth discussion on the new regulatory framework for the sector, the Ministry of Mines and Energy promoted the first reserve auctions exclusively dedicated to wind power. About 10 GW were qualified at each of the bidding rounds, and a total of 1.1 average GW or 2.7 GW of installed capacity was sold. Renova proved to be a key player in this process with the sale of 20 wind farms with a total capacity of approximately 420 MW, the largest individual volume for the two auctions together as well as having one of the largest capacity factors among the winning bidders.

The success of the auctions was so great that it allowed the government to incorporate wind power as a participant in the annual auctions, known as A-3. An element of predictability was introduced into the annual contracting of wind power, as can be seen from the Ten Year Energy Expansion Plan (PDE 2010-2019). This was instrumental in attracting a large number of turbine and equipment manufacturers to Brazil, reducing plant installation costs and consequently the price of energy, thereby initiating a virtuous circle for both wind power companies and for energy consumers.

The decision to list on BM&F Bovespa in 2010 was a natural consequence of the choices we had made in the past. We do not want to be just a company producing renewable energy, but rather the best company in the sector, and access to the capital markets is an important differential in a market which is still embryonic and diffused.

Renova is today a company with proven expertise in the development and structuring of projects, with established technological partnerships, financial capacity and which has partners who rank among some of the largest long-term investors in the country. Over the past ten years we have established one of the largest renewable energy portfolios in Brazil with tried and tested quality. We enjoy the benefits of a motivated workforce combining young professionals with others with long experience, a broad-based knowledge of the electricity sector and, very important, one that knows and shares the company’s values.

Looking further ahead we see major opportunities. Renewable sources have now reached a stage of maturity that has allowed the government to include these among its principal sources of power for meeting the expected growth in the demand for power as shown in the latest ten year plan. We have competitive projects and with scale, qualified to take part in the regulated market auctions, thus leaving us well positioned to continue our growth trajectory and increase market share. Our target is to offer our shareholders growth with quality and profitability.