Enel Wind Brazil

completed

EBP is a wholly-owned subsidiary of EGP, which is a publicly-listed renewable energy company vertically integrated within the overarching Enel Group (“Enel” or “the Group”) based in Italy. Established by Enel in December 2008, EGP is now a world leader in the field of renewable energy with an installed capacity of 8.7 GW, with over 700 plants in 16 countries and with a generation mix that includes wind, solar, hydro, geothermal and biomass. EGP has a substantial investment plan aimed at identifying, developing and promoting best technologies that can provide the highest power generation capacity with minimal adverse impacts to the environment and local communities.The proposed IFC investment – USD 200 million equivalent IFC A-Loan plus up to USD 220 million equivalent through local currency mobilization - will support EBP in its strategic growth objectives to develop 12 sub-projects located in five WPP clusters in the states of Rio Grande do Norte, Pernambuco and Bahia in northeast Brazil (“the Project”), which will be implemented over a period of two years. IFC’s corporate debt financing package will be applied to the Project. Each WPP cluster will be managed directly by EBP and its subsidiaries. The five clusters are described as follows. The Modelo WPP cluster (56.4 MW) is located in the municipality of João Câmara in the state of Rio Grande do Norte. This cluster consists of two sub-projects - Modelo I (30.5 MW) and Modelo II (25.8 MW). A total of 24 wind turbines will be installed. The Modelo site is located within the caatinga biome, but due to previous and current animal grazing and agricultural uses, the habitat is highly modified with most of the native vegetation affected. The area leased for the development of the WPPs is about 1,700 hectares. The Fonte dos Ventos WPP cluster (79.9 MW) is located in the municipality of Tacaratu in the state of Pernambuco. This cluster consists of three sub-projects - Pau Ferro (30.55 MW), Pedra do Gerônimo (30.55 MW) and Tacaicó (18.8 MW). A total of 34 wind turbines will be installed. The WPP site, including all installations and internal roads, is located immediately outside of an Indigenous Peoples (IP) Reserve, i.e. Terra Indígena Entre Serras of the Pankararu tribe. The site consists of a modified transitional habitat between caatinga and cerrado wooded grassland, mainly used for grazing and agriculture. The area leased is approximately 8,200 hectares, with a direct footprint of the installations and access roads of about 25 hectares.The Cristal WPP cluster (89.7 MW) is the largest of the clusters currently under construction and is located in the municipalities of Morro do Chapéu, Cafarnaum and Bonito in the state of Bahia. This cluster consists of three sub-projects - Cristal I (29.9 MW), Primavera (29.9 MW) and Sao Judas (29.9 MW). A total of 39 wind turbines will be installed. The site is situated on a rocky relief, with sandstone outcrops. Karst features, such as sinkholes and cavities, are located north of the site. The site consists of a natural habitat composed of caatinga shrublands. The lower elevation areas host limited and mostly dry-field agriculture and animal grazing. The area leased is about 8,300 hectares, with a direct footprint of the installations and access roads of about 50 hectares. The Serra Azul WPP cluster (60 MW) is located in the municipalities of Cafarnaum and Mulungu do Morro in the state of Bahia. This cluster consists of two sub-projects - Damascena (29.9 MW) and Dois Riachos (29.9 MW) (note a third sub-project at this site is not included in IFC’s investment). A total of 30 wind turbines will be installed. Habitat and land use are similar to the ones described for Cristal WPP (the southernmost point of Cristal is within six kilometers of Serra Azul). The Serra Azul WPP is situated on a sandstone relief with natural springs, sinkholes and cavities identified in a nearby karstic calcareous plateau. The area leased is approximately 11,400 hectares, with a direct footprint of the installations and access roads of approximately 30 hectares. The Curva dos Ventos WPP cluster (56.4 MW), located in the municipalities of Caetité and Igaporã Igaporã in the state of Bahia. This cluster consists of two sub-projects - Joana (28.2 MW) and Emiliana (28.2 MW). A total of 24 wind turbines will be installed. The surrounding region is semi-arid, characterized by vegetation of the caatinga and the cerrado biomes. Land use varies from lower valleys where there are rudimentary agricultural activities (subsistence crops) to the higher lands, where the WPP will be installed, with natural vegetation and limited animal grazing. The direct footprint of the installations and access roads is approximately 35 hectares. All WPPs are under construction, with the exception of Serra Azul, where construction is expected to start in 2014. The five WPP clusters will have similar characteristics in terms of wind turbines installed. Turbines at Cristal will be manufactured and installed by Siemens (2.3 MW, 99.5-meter hub height and a 108-meter rotor diameter). Turbines at Curva dos Ventos, Fonte dos Ventos and Modelo WPPs will also be manufactured and installed by Siemens (2.35 MW, same hub height / rotor diameter as previous). Turbines at the Serra Azul WPP will be procured from Gamesa (2 MW).Together the WPPs will comprise 342.4 MW of generation capacity (the five clusters containing relatively small sub-projects of about 10-20 turbines per site) and their energy will be delivered to the National Interconnected Grid of Brazil, reducing carbon dioxide emissions due to the displacement of electricity generated from burning fossil fuels in thermal power plants connected to the grid. The five clusters are registered under the Clean Development Mechanism (CDM) for trading certified emission reductions (CERs) under the Kyoto Protocol.With respect to environmental permits, all WPPs obtained the initial permit, the preliminary permit, Licença Prévia (or Licença de Localização in Bahia); all WPPs, with the exception of the Serra Azul cluster, obtained the installation permit, Licença de Instalação, which is necessary to begin construction. The company submitted the application for the final operational permit, Licença de Operação, for the Cristal cluster only.The Group operates in Brazil through EBP, which has been active in Brazil since 1996 following the acquisition of a group of companies from Rede group, owners of 20 mini-hydro plants with aggregate net installed capacity of approximately 93 MW. The company was recently awarded a total of 88 MW of wind generation, as well as the Apiacas HPP cluster (102 MW) in the State of Mato Grosso. These assets are not part of the financing included in IFC’s investment; however actions in this ESRS and ESAP are directed toward EBP at the corporate-level and will be relevant to all the Company’s renewable assets. As part of this appraisal, IFC reviewed the company’s E&S procedures for acquisitions, which are in place, but will be expanded upon as explained in the sections below.