IN-DEPTH: Exciting times at Renova

Matthias Becker

Mathias Becker says this month's A-3 tender has more risks than the previous one in August

The buzz of activity at Renova Energia's office will rise steadily in the coming months.

By early next year, the company is due  to connect 460MW of wind to the grid and close its capital increase process, which will see Cemig taking a controlling stake in Brazil's biggest wind developer.

Meanwhile, there are still two power auctions to be held in 2013, starting on 18 November, when Renova will take part in the A-3 tender.

Chief executive Mathias Becker won't comment publicly on this auction. Instead, during a press conference call, he said this tender has more risks than the previous one in August, which contracted 1.5GW of wind.

Becker cites grid-connection problems, the industry's shortage of equipment and the short time for project execution (about two years).

He reckons that the R$126 ($56) per MWh ceiling for the A-3 reflects all those risks. The previous tender had a ceiling of R$117/MWh.

In December, Renova participates in the A-5 tender. This time, apart from the very competitive wind projects, sources are eager to see the performance of the company's solar projects, designed to be developed near the 1.4GW wind complex it has been constructing in Bahia state.

By the end of January, Renova's 16-month-old, 294MW Alto Sertão 1 wind farm will come on line along with the 168MW Alto Sertão 2, which will only be completed when state-owned utility Chesf finishes the much-delayed transmissions lines it is installing.

One of the most keenly awaited landmarks for Renova will come by the end of February, when the R$1.4bn capital increase will be concluded.

State-owned giant Cemig is pouring fresh capital into Renova and buying 150MW of small-hydro assets from Brasil PCH that will become part of Renova's portfolio.

Renova will pay R$676m for these hydro assets, which still leaves R$738m from the capital injection that can be pumped back into wind farm construction.

Current shareholders will have 30 days to decide if they want to take part in the capital increase. Those include founders Ricardo Delneri and Renato Amaral, as well utility Light (which is controlled by Cemig) and BNDESPar, an investment arm of the national development bank, which is the biggest financial supporter of wind in Brazil. The capital increase could reach R$3.2bn.

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