CPFL Renovaveis Bio Alvorada & Bio Coopcana Biomass Plants

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The Brazilian company CPFL Renovaveis, a partnership of the Brazilian energy distribution company CPFL (63.6%) and ERSA (36.4%), was granted authorizations to build and operate two sugar-cane-residue fueled power plant located in the states of Minas Gerais and Parana (100 MW in total capacity). The 30-year contracts were signed with the regulatory agency ANEEL over the years starting in May 2002. The sponsors created the following special purpose companies to manage the projects: UTE Bio Alvorada (50 MW) – UTE Bio Alvorada S.A. UTE Bio Coopcana (50 MW) – UTE Bio Coopcana S.A. The value of the investment committed to the Alvorada and Coopcana projects was estimated at US$ 184.9 million (BRL 311 million). The power plants signed supply agreements with sugar-cane processing facilities in July 2011. Three-fifths of the electricity generated in the power plants was committed to attending these facilities in exchange for the biomass, while the remaining of the electricity generated was set to supply the grid through contracts established with their parent company, CPFL Energia. As of August 2011, construction works were underway, and the units were expected to commence operations by 2013. 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. In November 2011, the company applied for carbon credits. Commercial operations commenced in August 2013. In November 2012, the state-owned bank BNDES approved US$ 107.1 million (BRL 209 million) in loans to finance both power plants.