Brookfield Brasil Small Hydro Power Plants

active

The company Brookfield Brasil, a subsidiary of the Canadian group Brookfield Renewable Energy Partners, was established as one of the major players operating in the Brazilian market for small hydro power plants. Its portfolio was established both through the acquisition of existing power plants and with the granting of authorizations to build and operate new power plants. As of March 2013, its portfolio consisted of 36 small hydro power plants located in the states of Rio Grande do Sul, Parana, Santa Catarina, Minas Gerais, Goias, Mato Grosso and Mato Grosso do Sul with a total capacity of 443.4 MW. Each power plant received a license from the regulatory agency ANEEL with either 30 or 35-year duration. Brookfield Brasil was created in 1999 and it began its commercial operations in the end of 2003, when PCH Salto Natal (15 MW) and PCH Pedrinho I (16 MW) started supply electricity. The investment directed to these power plant was not available. In December 2003, Brascan Energetica, a subsidiary of Brookfield, acquired two power projects from Hidreletricas Grapon S.A., a subsidiary of the Brazilian company CAT LEO. Both power plants were operational at the time of the acquisition: PCH Ivan Botelho I (24 MW) - operational since 2003 PCH Tulio Cordeiro de Mello (16 MW) - operational since 2003 Brookfield paid US$ 16.8 million (BRL 51.7 million) in the acquisition. In October 2005, Brascan Energetica acquired six authorizations that were previously granted to the Brazilian company Azaleia by the regulatory agency ANEEL. Of the six acquired projects, only one was operational at the time of the ownership transfer: PCH Cacador (23 MW) - Became operational in 2008 PCH Cotipora (20 MW) - Became operational in 2008 PCH Linha Emilia (20 MW) ¬ Became operational in 2009 PCH Passo do Meio (30 MW) - Operational since 2003 PCH Pezzi (19 MW) - Became operational in 2012 PCH Serra dos Cavalinhos II (29 MW) - Became operational in 2013 Brookfield paid US$ 22.9 million (BRL 55.6 million) for this acquisition. PCH Cacador, PCH Cotipora and PCH Linha Emilia were included in PROINFA, a federal sponsored program which established power purchase agreements for the sale of electricity. Also in 2005, another of Brookfield's power plants became operational: PCH Salto Corgao (27 MW). The investment directed to this power plant was not available. In April 2006, another six power plants (75 MW in total capacity) were acquired, again from the Brazilian company CAT LEO by Brascan Energetica Minas Gerais, a subsidiary of Brookfield. All of these power plants were operational at the time of the purchase: PCH Ivan Botelho II (12 MW) - Operational since 2003 PCH Ivan Botelho III (24 MW) - Operational since 2005 PCH Ormeo Junqueira Botelho (23 MW) - Operational since 2003 PCH Anna Maria (2 MW) - Operational since 2003 PCH Benjamin Baptista (9 MW) - Operational since 2003 PCH Guary (5 MW) - Operational since 2003 Brookfield paid US$ 122.5 million (BRL 267 million) for this acquisition. Also in 2006, two other power plants became operational: PCH Piranhas (20 MW) and PCH Sacre II (30 MW). PCH Piranhas was included in PROINFA, a federal sponsored program which established power purchase agreements for the sale of electricity. The investment directed to these power plants was not available. Eleven of the power plants (45.14 MW in total capacity) were acquired in 2007 when Brookfield bought the company Zona da Mata Geração, a subsidiary of the Brazilian company Energisa: PCH Cachoeira Alta (0.3 MW) PCH Coronel Domiciano (5 MW) PCH Ervalia (7 MW) PCH Joao Camilo Penna (22 MW) PCH Matipo (0.42 MW) PCH Mauricio (1 MW) PCH Miguel Paiva (1 MW) PCH Neblina (6 MW) PCH Roca Grande (1 MW) PCH Santa Cecilia (0.42 MW) PCH Sinceridade (1 MW) All these power plants were already operating by the time of the purchase. Brookfield paid Energisa US$ 150 million in this deals. Also in 2007, two other power plants became operational: PCH Ponte Alta (13 MW) and PCH Salto (19 MW). In 2010, PCH Angelina (25 MW) and PCH Santa Ana (6.3 MW) commenced operations. Besides the power purchase contracts established through PROINFA, Brookfield's power plants also sell its electricity in the unregulated market and to electricity distribution companies. Brookfield was granted the right to take part in the government program called Regime Especial de Incentivos para o Desenvolvimento da Infra-Estrutura (Reidi). Companies selected to take part in this program were given tax cuts in the acquisition of capital equipment and construction material acquired both in the domestic and international markets (this incentive represented a cost reduction of about 9.25%). In addition, the company was allowed to use accelerated depreciation methods of accounting for construction expenditures. The company first applied for carbon credits in April 2006.