Santana I, Santana II and Calango Wind Power Plants

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The Brazilian Company Forca Eolica do Brasil S.A., a partnership of the Spanish company Iberdrola's subsidiaries Neoenergia S.A (50%) and Elektro Renovaveis do Brasil S.A. (50%), was granted the authorization to build three wind power plants located in the state of Rio Grande do Norte, municipalities of Lagoa Nova and Bodo (84 MW in total capacity). The 35-year contracts were signed with the regulatory agency ANEEL starting in November 2014. The company created three special purpose companies to manage the projects: Santana 1 Energia Renovável S.A. - EOL Santana I (30 MW) Santana 2 Energia Renovável S.A. - EOL Santana II (24 MW) Calango 6 Energia Renovável S.A - EOL Calango 6 (30 MW) The total investment in the power plants was estimated at US$ 160.1 million (BRL 552 million). Financial closure was achieved in December 2016, when the sponsor was granted a US$ 79.5 million (BRL 274 million) loan from the Brazilian state-owned bank BNDES. The remaining investment cost was equity financed. Construction works commenced in March 2016 and were expected to be concluded by 2017. The government periodically runs public bidding for the sale of energy to the country´s distribution companies. Santana I and II and Calango 6 won the public bidding that took place in June 2014 by offering an average tariff of US$ 54.9/MWh (BRL 128.98/MWh). The project companies signed 20-year power purchase agreements with the several electricity distribution companies. The project 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.