Project Portfolio

Installed Capacity

Potential Project Portfolio ⁽²⁾

⁽¹⁾ Installed capacity relates to each project in the event that the wind farm is built according to the project submitted to ANEEL (the electric energy regulator)

⁽²⁾ On the basis of the experience of our controllers and management, we have made significant investments in regions where there is wind power potential in addition to submitting specific requests for authorization to ANEEL. Although not having received all the necessary authorizations for installation of our projects, we believe that these represent significant value in terms of the knowledge gained of the market and start-ups in operations.

In addition, we have been operating three SHPs for more than a year in the state of Bahia, together representing an installed capacity of 41.8MW. Furthermore, our SHP project portfolio has a potential installed capacity of 1,467.5MW. The following table shows a summary of our SHP portfolio, its potential installed capacity and the respective phases of development:

Potential Projects Portfolio ⁽³⁾

⁽¹⁾ Installed capacity relates to each project should the SHP be constructed in accordance with the project submitted to ANEEL.

^(²) The inventory study is conducted on the basis of river characteristics. One river may have the potential for building a single SHP or various. We can give no assurance that our projects shall be built exactly according to plan. The installed capacity shown in the table may thus diverge from eventual capacity once the project is operational. We may also decide not to implement these projects. Again, we may not be able to implement all the projects should we be unsuccessful in obtaining all the necessary authorizations.

^(³) On the basis of the experience of our controlling companies and management, we have undertaken significant investments in technical studies of rivers as well as requests to ANEEL for specific projects. Although not having received all the necessary authorizations for installation of our projects, we believe that these represent significant value in terms of the gain in knowledge of the market and start-ups in operations. The energy generated from our three SHPs currently in operation has been sold to Eletrobrás within the scope of PROINFA (Incentive Program for Alternative Electric Energy Sources) for a 20-year period at a current price of R$165.85 per MWh (baseline date of May 2010). The three plants were responsible for generating gross operating revenue of R$35.0 million in 2009. The construction of these SHPs was partially funded from BNB (Banco do Nordeste do Brasil) credit lines within the scope of the Constitutional Fund for the Financing of the Northeast – FNE for a tenor of 20 years.

At the Reserve Energy Trade Auction 2009, energy to be generated by our Wind Farms (in the process of installation) was sold for a 20 year period from startup date of operations. This energy will be acquired by the Electric Energy Trade Board (CCEE). Commercial operations at the wind farms in question are forecasted to begin in July 2012. At Reserve Energy Auction 2009 sale prices with lots sold at R$144.94 or R$146.94 per MWh (a weighted average of R$145.80 per MWh), and considering an energy output of 127 average MWh, equivalent to the physical guarantee of these wind farms as determined by the MME (Ministry of Mines and Energy), the total value corresponding to this contracted energy at 2009 prices would be approximately R$162 million (in terms of gross annual revenue). Capital expenditures for installing our wind farms following winning bids at the Reserve Energy Auction 2009 will be approximately R$1.0 billion of which about 80% corresponds to the acquisition of 180 1.5MW wind turbines as well as a package of transportation, assembly and commissioning services already contracted from General Electric.

In addition to a clean source of electricity for which there is strong demand in the market, the generation of electricity from renewable energy enterprises (SHPs, wind farms, biomass-fired thermal power plants and solar energy) enjoy a series of benefits in comparison with other types of energy projects. These include: (i) a 50% discount in transmission and distribution tariffs when sold to Free Consumers; (ii) the possibility of Special Consumers (consumers with a contracted demand between 0.5MW and 3.0MW, eligible to contract energy from renewable energy sources) purchasing energy generated from renewable sources; (iii) less difficulty in obtaining environmental licensing; (iv) potential revenue from carbon credits since renewable energy generators are eligible for these credits through the Clean Energy Mechanism under the aegis of the Kyoto Protocol; and (v) being normally projects which are individually of a smaller size, they are eligible for taxation according to the presumed profit regime.