Renova Energia Alto Sertao III Phase A Wind Park

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Diamantina Eolica Participacoes, a wholly-owned subsidiary of the Brazilian company Renova Energia, was granted authorizations to build twenty-four wind power plants located in the state of Bahia (416.3 MW in total capacity, municipalities of Caetite, Urandi, Licinio de Almeida, Riacho de Santana, Pindai e Igapora). The project was named Alto Sertao III - Phase A Wind Park. The following project companies were created to manage the power plants: * Central Eolica Abil S.A. - EOL Abil (23.7 MW) * Central Eolica Acacia S.A.- EOL Acácia (16.2 MW) * Central Eolica Amescla S.A. - EOL Amescla (13.5 MW) * Central Eolica Angelim S.A. - EOL Angelim (24.0 MW) * Central Eolica Angico S.A. - EOL Angico (8.1 MW) * Central Eolica Barbatimao S.A. - EOL Barbatimao (16.2 MW) * Central Eolica Cedro S.A. - EOL Cedro (11.1 MW) * Central Eolica Facheio S.A. - EOL Facheio (16.5 MW) * Central Eolica Folha da Serra S.A. - EOL Folha de Serra (21.0 MW) * Central Eolica Imburana Macho S.A. - EOL Imburana Macho (16.2 MW) * Central Eolica Jabuticaba S.A. - EOL Jabuticaba (9.0 MW) * Central Eolica Jacaranda do Cerrado S.A. - EOL Jacarandá do Cerrado (21.0 MW) * Central Eolica Jatai S.A. - EOL Jatai (16.2 MW) * Central Eolica Juazeiro S.A. - EOL Juazeiro (18.9 MW) * Central Eolica Manineiro S.A. - EOL Manineiro (14.4 MW) * Central Eolica Pau d'Agua - EOL Pau d'Agua (18.0 MW) * Central Eolica Sabiu S.A. - EOL Sabiu (13.5 MW) * Central Eolica Sao Salvador S.A. - EOL Sao Salvador (22.4 MW) * Central Eolica Taboquinha S.A. - EOL Taboquinha (21.6 MW) * Central Eolica Taboa S.A. - EOL Tabua (15.0 MW) * Central Eolica Umbuzeiro S.A. - EOL Umbuzeiro (21.6 MW) * Central Eolica Unha d'Anta S.A. - EOL Unha d'Anta (13.5 MW) * Central Eolica Vaqueta S.A. - EOL Vaqueta (23.4 MW) * Central Eolica Vellozia S.A. - EOL Vellozia (21.3 MW) The 35-year contracts were signed with the regulatory agency ANEEL starting in May 2013. The total investment in the power plants and the associated transmission line was estimated at US$ 696 million (BRL 1635.8 million). In December 2014, the state-owned development bank BNDES approved a US$ 220.2 million or BRL 517.8 million loan to finance the project. In October 2015, BNDES provided an additional loan of US$ 49.2 million (BRL 164 million). The government periodically runs public bidding for the sale of energy to the country´s distribution companies. Ten of the listed power plants controlled by Renova won the public bidding that took place in 2012 and 2013, by offering an average tariff of US$ 44.7/MWh (BRL 105/MWh). The project companies signed 20-year power purchase agreements with the several electricity distribution companies, and the agreements included the annual adjustment of the tariff to the inflation rate. Renova committed to start supplying to the market in September 2015 and January 2017. Twelve of the power plants signed power purchase agreements with the distribution company Light, and the operation of these power plants were estimated to commence in September 2015. One power plant sold its electricity in the unregulated market. 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. Finally, the electricity sold by the company is not subject to sector taxes.