Canoas, Lagoa 1 and Lagoa 2 Wind Power Plants

active

Forca Eolica do Brasil, a partnership of the Spanish company Iberdrola's subsidiaries Elektro (50%) and Neoenergia (50%), was granted the authorization to build three wind power plants located in the state of Paraíba, municipalities of Sao Jose do Sabugi, Santa Luzia and Junco do Serido (90 MW in total capacity). The 35-year contracts were signed with the regulatory agency ANEEL starting in August 2015. The company created three special purpose companies to manage the projects: Canoas Energia Renovável S.A - Canoas (30 MW) Lagoa 1 Energia Renovável S.A - Lagoa I (30 MW) Lagoa 2 Energia Renovável S.A - Lagoa II (30 MW) The total investment in the power plants was estimated at US$ 186 million. Construction works commenced in January 2017 and were in its final stages by June 2017. No detailed financing information was available. The government periodically runs public bidding for the sale of energy to the country´s distribution companies. Canoas, Lagoa I and Lagoa II won the public bidding that took place in November 2014 by offering an average tariff of US$ 57.9/MWh (BRL 136.24/MWh). The project companies signed 20-year power purchase agreements with the several electricity distribution companies. The company 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.