Increase our transmission capacity by participating in new energy transmission auctions and obtaining new concessions

In April 2017, in the Transmission Auction No. 005/2016 promoted by ANEEL, the Company won four transmission concessions in Brazil, as follows: Lots 4, 20, 22 and 27, which are distributed in the states of Mato Grosso do Sul, Ceará, São Paulo and Santa Catarina, comprising approximately 600km of transmission lines at 230kV and a transformation capacity of 300MVA. Such concessions have yielded attractive returns for the transmission segment. And in December 2017, in the Transmission Auction No. 002/2017, we won lots 4 and 6 which, together, comprised 4 transmission lines.

In December / 2018, Neoenergia was the most prominent competitor in the Transmission Auction 04/2018 of the Agência Nacional de Energia Elétrica (ANEEL). The company has won lots 1 (the largest in dispute), 2, 3 and 14, which include lines and substations in the states of Paraná, Santa Catarina, Rio Grande do Sul, Rio de Janeiro, Minas Gerais and Espírito Santo. The investments planned by ANEEL in these four lots are in the order of R $ 6 billion, but Neoenergia already has significant part of the investments secured with suppliers in amounts lower than indicated by ANEEL. With this result, we intend to build an additional 3,000 kilometers of lines, representing a 129% increase in the transmission business of the group. Neoenergia’s Permitted Annual Revenue (PAR) (Revenue to which the entrepreneur is entitled for the provision of the transmission service from the commercial operation start of the facilities) related to the four lots won, will be R$ 501 million (value updated dec/18).

In the Auction for the Concession of Transmission Public Service of electric power  No. 02/2019 – held on December 19, 2019 – Neoenergia won lot 9, located in Bahia, which comprises 1 transmission line of 210 km  and 2 substations. The maximum limit for the construction of the works is 48 months from the signing of the respective contracts, which will take place within the deadlines set in the notice. The total capex estimated by the regulator (Aneel) for the lots sold is around R$ 303 million. The total Allowed Annual Revenue (RAP) of the new projects is R$ 18 million.

In Brazil, there is a huge demand for investments in expansion of the transmission segment. Recently the returns of this segment were rebalanced, increasing the attractiveness of the projects. We expect new auctions to be held in the future and we will continue to assess opportunities in transmission projects, focusing on the profitability of each lot and on the operational synergies with our existing assets.